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Nigeria Fertilizer Voucher Program

Smallholder farmers in Nigeria have access to subsidized fertilizer – many for the first time in 10 years – thanks to a voucher program implemented by IFDC. IFDC has helped more than 1.2 million farmers and nearly 1,500 agro-dealers access agricultural inputs, such as fertilizers and improved seeds, through its past and present voucher programs in several developing countries.

Voucher programs help smallholder farmers obtain inputs while simultaneously building business opportunities for rural agro-dealers and distribution channels for larger input suppliers. Vouchers are often called “smart subsidies” because they supply inputs to farmers without disrupting the commercial market.

Agriculture employs about 70 percent of Nigeria’s population. Although the federal government subsidized fertilizer procurement and distribution between 1977 and 1996, no more than 30 percent of the fertilizer reached farmers. In 1997, the sector was abruptly liberalized but without a transition period or support for the private sector. Fertilizer use fell from a peak of 1.2 million metric tons (mmt) in 1992 to 56,700 metric tons (mt) in 1997. A federal subsidy of 25 percent was reintroduced in 1999, and many of Nigeria’s state governments also added their own subsidies.

Because fertilizer has been subsidized to such a degree, there has been no incentive for the private sector to build either a fertilizer distribution system or a retail sales network. Therefore, fertilizer often fails to reach the smallholder farmers who need it the most.

The federal government announced that it is working toward another complete withdrawal from fertilizer procurement. However, to facilitate a smooth transition and ensure that fertilizer reaches targeted beneficiaries, the federal and state governments of Nigeria requested IFDC’s help in leading a large-scale voucher program in Kano and Taraba states during 2009. Due to its success, an expanded 2010 program was implemented in Bauchi and Kwara states, as well as the two states that pioneered the program in 2009 – Kano and Taraba. IFDC previously implemented two small voucher programs in Nigeria in 2004 and 2008.

2009 Program

The 2009 voucher program had two main goals:

To guarantee that fertilizer reached the farmers who needed it the most.
To ensure that a private sector fertilizer supply and distribution channel was in place.

IFDC implemented the program and provided technical support. Funding came from the Nigerian National Food Reserve Agency (NFRA), Kano and Taraba state governments, the U.S. Agency for International Development (USAID) and the Alliance for a Green Revolution in Africa (AGRA).

Nearly 200,000 farmers in Kano and Taraba states gained access to about 30,000 mt of subsidized fertilizer through the 2009 voucher program. The offer varied between the states, but eligible farmers were entitled to either three or four bags of fertilizer at a heavily subsidized price. Rigorous identification and inspection systems were established to deter fraud and abuse and to ensure that fertilizer reached smallholder farmers.

In addition to helping farmers access agro-inputs, IFDC voucher programs provide training and technical assistance to both farmers and agro-dealers. Agro-dealers are trained to introduce new technologies and to teach their farmer-customers how to correctly use inputs.

Nearly 10,000 farm group chairmen, extension officers, agro-dealers and “master” trainers were trained through the 2009 program. Participants in the voucher program expressed interest in registering for farm groups in 2010.

2010 Program

The 2010 voucher program continued to introduce a more economical and efficient system for state governments to distribute discounted inputs to targeted farmers while simultaneously strengthening all stakeholders’ capabilities to implement a similar, sustainable program in the future. IFDC worked with state and federal government officials, state extension agencies, NFRA, the National Program for Food Security, the Nigerian Bureau of Statistics, fertilizer companies, USAID and smallholder farmers.

The program consisted of the following phases:

Planning the design and process.
Identifying beneficiaries.
Training program participants.
Distributing vouchers.
Distributing fertilizers.
Redeeming vouchers.

IFDC provided vouchers for more than 170,000 smallholder farmers in 2010; more than 16,000 mt of fertilizer were distributed. Over 28,500 farmers indicated that it was their first time to ever use fertilizer. Stakeholders were informed about the program through radio broadcasts, pamphlets, text messages and launching ceremonies.

Targeted crops included maize, millet, rice, sorghum and soybeans. Three companies – Golden, Notore and Tak Continental – supplied the fertilizer for the program and more than 130 independent agro-dealers distributed it to targeted farmers.

2011 Program

In 2011, more than 51,000 farmers in Taraba State received fertilizer through a fertilizer voucher program. About 90 percent of targeted farmers received subsidized fertilizer. The private sector competed to deliver quality fertilizers to farmers by creating direct linkages from suppliers to distributors and from distributors to local agro-dealers. IFDC worked with the Nigeria Ministry of Agriculture on a plan to expand the voucher program to all 36 of Nigeria’s states. The expanded program was recognized and approved at the 38th Meeting of the National Council on Agriculture and Rural Development in order to assist the federal government in withdrawing from the procurement and distribution of fertilizer.

2012 Program

Another program was implemented in Taraba State in 2012 in collaboration with Springfield and Notore fertilizer suppliers and the Federal Ministry of Agriculture and Rural Development. Each of nearly 40,000 farmers was able to access two 50-kilogram bags of discounted fertilizer from the private sector. Phone numbers and identification numbers for more than 30,000 farmers were collected, enabling them to participate in the 2013 program using their mobile phones.