Seeking an Alternative Modality to the Management of Nigeria's Fertilizer Subsidy Scheme-An Empirical Approach to the Case Study of Ondo State (1976-1996)

Abstract

Problem statement: The objective of Nigeria’s fertilizer subsidy scheme was to make inorganic fertilizers readily available to farmers at affordable prices in order to boost food production in the country. Shortly into the scheme, farmers complained that fertilizers were not received at the time of need and in sufficient quantities. Approach: Using Ondo State, Nigeria as a case study, to determine; inter alia, if the farmers’ complaints were founded and if so, to design alternative ways of administering the scheme such that the lofty goals for which it was established could be realized. Methodology: Primary data were collected from 596 farmers randomly selected from the state. Secondary data were collected from purposively selected NAFCON, AISC, ADP, FPDD (now FFD) and a published book source. The primary data were analyzed with the use of descriptive statistics such as percentages and means. The secondary data were analyzed with the use of OLS and TLS regression methods. Results: The descriptive analyses showed that farmers in Ondo State did not receive their fertilizer supplies in sufficient quantities and at the time of need, despite the fact that supply surpassed adoption (demand) for most years of the study period. The inferential analyses showed that a subsidy introduced into NAFCON and other producing firms’ production processes would engender increased output and induce fertilizer prices to fall in Ondo State. Conclusion: These results showed that farmers in Ondo State did not receive their fertilizer supplies at the time of need and in sufficient quantities due to leakages and diversion of the substance from the vast bureaucratic distribution channels. As an alternative, if subsidy was administered through the producing firms’ production processes, output of fertilizers would have increased making the market supply curve of fertilizers to shift to the right. This would have also caused the price of fertilizer to fall in the state.