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Chapter 6. Fertilizer distribution system

Farmers require a license granted by the Ministry of Agriculture and Agrarian Reform (MAAR) or from its directorates in the provinces, before planting any of the following categories of crops:

In granting the license, the Ministry calculates the farmer’s requirements of seeds, fertilizers and other inputs. The fertilizer requirement for each crop is fixed in consultation with the Soils Directorate. Once a license is obtained, the farmer has relatively easy access to inputs including fertilizers from the Agricultural Cooperative Bank (ACB). He may also have a guaranteed market for his crop if it is one that is marketed by a government agency.

The ACB is theoretically the main or sole source of fertilizers and almost certainly accounts for the bulk of “first” sales. But there is evidence of substantial redistribution since fertilizers are available on the parallel market at prices higher than the official rate. Redistribution appears to shift fertilizer use from the drier or poorer soil areas of Zones 1 and 2 towards wetter or irrigated areas and from licensed but unplanted areas to areas of unlicensed crops.

However, there is very little available information regarding the parallel market sources of fertilizer supply. It seems that two factors may be the most important determinants of fertilizer supply in the parallel market. The first is the total quantity of fertilizer available for distribution by ACB, since it is suspected that most of the fertilizer market supplies originate from the ACB. The second important factor is the degree of government monitoring and enforcement of the distribution activities of the ACB. If the government decides to increase its vigilance, the proportion of total fertilizer sold on the parallel market declines.

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