Fertilizer market development: a comparative analysis of Ethiopia, Kenya, and Zambia

This article synthesizes case studies from Kenya, Zambia, and Ethiopia to assess how differences in the implementation of fertilizer marketing policies have affected the costs and risks borne by marketing actors, the investment response by private traders, and fertilizer consumption. Financial cost accounting techniques indicate that domestic marketing costs account for 50% or more of farm-gate prices. The sum of importer, wholesaler and retailer profit margins generally account for less than 10%. There are opportunities to reduce domestic marketing costs through the following: reducing port fees, coordinating the timing of fertilizer clearance from the port with up-country transport, reducing transport costs through port, rail. and road improvements, reducing high fuel taxes, and reducing the uncertainty associated with government input distribution programs that impose additional marketing costs on traders. Estimated reductions in the farm-gate price of fertilizer from implementing the full range of options identified in each country range from 11 to 18%. Price reductions of this magnitude, if passed along to farmers, would increase farmers' effective demand for fertilizer. Investments in selected publically provided goods, often considered outside the scope of fertilizer marketing policy per se, strongly affect the costs of fertilizer, farmers' willingness to pay for it, and hence the performance of markets. (C) 2003 Elsevier Ltd. All rights reserved.