Opening Comment
Before being with my commentary, I would like to express my concern and disappointment on the limited commentary being submitted to this forum. Only 15 comments for a forum that is over half completed. Perhaps it is just poor time around the major Christmas/New Year Holidays.
Introduction – Economically Suppressed Economy (Revisited)
for my additional commentary. Having been encouraged by the facilitators comment that the forum was intended to look at the administrative issues surrounding fertilizer usage, allow me to continue where my first comment left off and review the other aspect of a financially suppressed economy, with limited tax base to support public services. That is the need to rely on the private sector for most business activity with an emphasis on the family enterprise system that is in most direct contact with smallholder producers. These are the default service providers that handle the bulk of the agriculture support business, both inputs and marketing, even when there are major development NGOs and public-sector entities trying to assist small farmers, and often boasting how great they are. Given the limited government budgets to provide a regularity service, and the fairly large prospects that when attempting there is greater prospects that the service will be on the honor/gratuity system more providing an informal income opportunity for the civil officers than an effect quality or regulatory control, there really is not much alternative.
http://smallholderagriculture.agsci.colostate.edu/financially-suppresse…
http://smallholderagriculture.agsci.colostate.edu/consumer-price-compar…
http://smallholderagriculture.agsci.colostate.edu/informal-income-oppor…
Private Service Providers – Family Enterprise System
The question is how necessary is such quality and regulatory control over fertilizer and other agronomic inputs in a financially suppressed economy? That is, with the limited purchasing power of an impoverished society, there is tremendous downward pressure on consumer products. Typically, consumer price of locally produced foods will be only 1/3rd or 1/5th that in more developed countries like the USA. For this to happen, the crop production delivery system must be extremely efficient with razor thin profit margins, particularly if fuel prices are at a primum to at least the USA price more in line with European prices, and inputs such as fertilizer and crop protection chemicals are on the world market prices. There is no room for any cumbersome business model as usually found with Government Parastatals or even Producer Organizations. Under these suppressed economic conditions, it is possible for the nominal price the farmer receives be only 1/3rd the consumer price, with the difference representing easily accounted for in packing, spoilage loses, pilferage, shipping costs, etc. leaving only reasonable profit margins for the middle men preforming the essential services.
It should be noted that the private service providers are often condemned as being exploitive of smallholder farmers. However, this done by decree without any supporting documentation of costs of business accounting, including the nearly transparent tripling of ton/km transport costs for working off the tarmac to serve remote smallholder areas. Without any supporting data, such condemnation could be considered slander and those making such claims subject to the host country liability laws governing slander. It should also be noted that those making the slander condemnations usually have a vested interest in promoting government support services and producer organizations seeking donor support, etc.
http://webdoc.agsci.colostate.edu/smallholderagriculture/ECHO-Private.p…
http://smallholderagriculture.agsci.colostate.edu/private-service-provi…
http://webdoc.agsci.colostate.edu/smallholderagriculture/Off-TarmacTran…
Parastatal and Producer Organizations
These alternative of government parastatals and producer organizations and touted as being ideal and in the best interest of the smallholder farmers. However, this is again done by decree without any accounting or other supporting data comparing the costs of business between them and the competing private service providers. Just a rather arrogant assumption that because they represent the government or farmers, they are automatically competitive with no need to keep track of overhead costs. Certainly, parastatals have been fully discredited for their cumbersome non-transparent business model, and we need not return to the ADMARCs that plagued Malawi for many years. However, the producer organizations may not be much of an improvement. While they claim they can bulk up commodities for sale or inputs for purchase to get the farmers a better price, and this is possible but I have never seen what this means in terms of percent of financial benefit. Is it 1%, 2%, does it go as high as the 35% needed to offset the overhead costs mentioned by the Central Growers Association in Kitway, Zambia. Nor have I ever seen the overhead costs to obtain these benefits to make certain the overhead costs are less than the private service providers thin profit margins. Thus, the proclaimed and envisioned financial benefit remains completely unsubstantiated. Instead there appears a large complaint about not honoring commitments and members side selling the bulk of produce to the “much condemned” private service providers for immediate cash and necessary by the overall financial management strategy of retaining goods in-kind as long as possible, selling only to meet immediate cash needs and needing the cash. The net result is that producer organization rarely have a market volume appreciable exceeding the loan repayments with 90% or more being side sold to private service providers. I don’t think you can substantially impact poverty with that limited market volume. This is than covered up with some exceptional promotional reporting, that rambles on but avoid including the basic business parameters that determine the success and sustainability of an enterprise.
http://smallholderagriculture.agsci.colostate.edu/perpetuating-cooperat…
http://smallholderagriculture.agsci.colostate.edu/request-for-informati…
http://smallholderagriculture.agsci.colostate.edu/financial-management-…
http://smallholderagriculture.agsci.colostate.edu/appeasement-reporting…
Quality control
While one of the important concerns in fertilizer management is quality control and avoiding someone diluting the nutrient content, the question how can this be best done with financially stalled government that would struggle to maintain a fertilizer testing lab to verify the nutrient content of imported or manufactured materials, and fudge the results as an informal income opportunity. For this I don’t have a real answer nor webpage to reference. However, the starting point would be to import only well bagged fertilizer with the manufactures label clearly visible including a date/batch stamp that could be traced and at least the age and expiration date clearly discernable. I would expect the cost of tampering with such bags would not be worth the added value of diluted material, and any breakage bags would have to be sold at a discount. Again, I would expect the private traders would be more concerned with maintain high quality as they rely on repeat customers. One aspect of private sector business model is the importance of inventory control and not get overstocked that ties up needed capital. It also must be noted that some fertilizer like urea, and NH4SO4 can usually be visible identified just by looking at the granular structure, and if someone attempted to dilute the fertilizer with sand this would also be easily seen with quick bag check.
Application rates
Finally, one must look carefully at the recommended application rates and possible need for farmers to adjust them to their specific conditions. In this regard, it must be noted that recommendations are based on small plot analysis aimed at maximum yield, and not the economic optimal yield that provides the farmers the best return on their investment. I would venture that under developed country conditions the optimal fertilizer applications would be 75 to 80% of the maximum yield recommendation, however, under the suppressed economic conditions of most developing counties with the more limited returns they can receive the optimal percent could go as low as 60% of maximum. This might then be further eroded by the operational limits under which smallholder operate particularly if relying mostly on manual labor working with hoes. This operational limit will extend crop establishment up to 8 weeks, with considerable additional compromise in terms of plant populations and quality weeding. All of this progressively costing potential yield and impacting on fertilizer response.
http://webdoc.agsci.colostate.edu/smallholderagriculture/OperationalFea…
http://smallholderagriculture.agsci.colostate.edu/calorie-energy-balanc…
At this point I have said more than enough and will sign off. I hope you all have a chance to review some of the referenced webpages and additional links within them.
Thank you for putting up with this bit of unrepentant heresy.
Dick Tinsley
Dr. Dick Tinsley