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Innovations in improving access to inputs to smallholder farmers in Ethiopia
October 17, 2014
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ATA is currently engaged in major initiatives to improve access to fertilizer
• Developing a digital soil map for Ethiopia - Ethiosis
• Developing evidence based fertilizer application
recommendations
• Establishing fertilizer blending plants
• Large scale demonstration of new fertilizers IVR based
extension system on proper fertilizer application
• Streamlining the fertilizer distribution system and
providing input credit
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3
0
0,5
1
1,5
2
2,5
0
100
200
300
400
500
600
700
800
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Tons/ha
Dap Urea total Yield
Year
Fertilizer use and crop yields in Ethiopia 2002-2013 Thousand MT
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Status of Ethiosis Soil Survey
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5
Status of Ethiosis Soil Survey
• So far, EthioSIS has accomplished soil fertility survey in 277 woredas in the country, of these, 35 are woredas in Tigray have been completed; and will reach about 501 by end the of July 2015.
• Soil inventory for fertility purpose now stands at >31,000 soil samples,
• Of the 277 surveyed woredas, soil analysis completed for 170,
• Fertilizer recommendation for at least 170 woreda is completed
hence impacting the national fertilizer procurement
decision
Outside view of one of the Fertilizer Blending
Plants inaugurated (June 2014)
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Internal view --- packaging.
Locally produce up to 500k ton of blends
8
50
214
458
524 524
0
300
600
2018 2014 2017 2016 2015
Production (kton)
Tigray, Amhara, Oromia(2) & SNNP
Production started in June 2014
Construction and equipment are
currently procured for other plants
The Fertilizer Blending initiative
100kton per plant (500kton total)
Expected production of local plants (kton)
Already for the first year, a production of 61kton of blended fertilizer is
expected
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Blended fertilizer demonstration on farmer’s plot in East Wollega, Guto Gida woreda, Demeksa kebele---October 8, 2013
Teff variety Kuncho row-planted 15 days later
than the adjacent plot and that received blended
fertilizer 2 (NPSZn) plus urea showed good crop
stand with green color
The same tef variety (Kuncho) planted 15 days earlier
as broadcast and with DAP and Urea didn’t perform
well compared to the other adjacent plot
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Why input finance?
• The economics of fertilizer use in Ethiopia demonstrates a clear value proposition for usage across most crops and regions – however, fertilizer usage has increased only marginally over the years
• These low adoption and application rates of fertilizer can be in part explained by absence of access to input credit, a key determinant of fertilizer use as well as seed purchase
• ATA and MoA has therefore focused significant effort in the past few months on improving Ethiopia’s input credit system
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Payment for default
Credit
Cash
Input Flow
Credit guarantee
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ATA and MoA have been working to diagnose problems in the current input credit system
Cash/credit flow Product flow
International supplier
Agricultural Input Supply Enterprise
(AISE)
Coop Union & Federations (Selected by
AISE)
Commercial Bank of Ethiopia (CBE)
(Loans for Cooperative Unions)
Regional Agricultural Bureaus
Primary Cooperatives
Smallholder farmers
Cooperative Unions
Source: IFPRI, 2012; stakeholder interviews
Commercial farms
CBE issues loans to cooperative unions via a regional
representative; funds are sent straight to AISE
If coop unions default, regional
government covers the balance
Regional government credit is no longer
passed on to farmers, but some primary
coops offer loans to members from their
own funds
Fertilizer value chain example
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Commercial Bank of Ethiopia (CBE)
Financial Institutions (such as MFIs, RUSACOs and commercial banks with local presence)
Primary Coops
Regional Government Guarantee
Coop unions Farmers
Voucher on credit
Farmer presents voucher for
input provision
Inputs provided to farmers
Voucher redeemed for credit against loans; additional cash payments as necessary
Loans for union fertilizer purchase / capital adequacy for farmer vouchers
Loan repayment
Payment for fertilizer
WORK IN PROGRESS
Output buyers2
E-voucher Cash Flow Input Flow Loan repayment Output Flow
Payment for produce with loan & fees deducted
Farmers aggregate & sell their outputs to buyers
Payment for farmers’ produce
Payment for inputs
1 May not be required if risk mitigation mechanisms are put in place, particularly a designated buyer of farmer output 2 Purchasing arrangement will vary by crop and region but could include letters of intent to purchase or more formal contract agreement
Newly designed input credit delivery system
Agricultural input producers,
international suppliers, and importers
Agricultural inputs (improved seed, fertilizers and chemicals)
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Appropriate risk mitigation mechanisms are necessary
• Use of vouchers and other electronic transfers to reduce cash management
• Technical assistance for financial institutions on risk management / monitoring
• Financial literacy campaigns for farmers – flyers, radio, TV, drama
• Farmer collateral groups
• Separation of the input retailing responsibility of coops from credit disbursement and collection
• Crop insurance solutions are being developed
• Establishment of guaranteed markets for produce (e.g., purchase contracts with producers)
Risk mitigation mechanisms include…
Some results from the 2013 pilot in Amhara Region
Expected average yield per hectare (qt/ha)
20
63
36
23
66
39
70
40
60
maize
50
30
10
+3
+3
+3
teff wheat
20
2006
2005
Number of farmers engaged in 2006
193,000
148,500
2005
200,000
100,000
2006
50,000
+30%
150,000
Dap
100
37
75
170
39
90
180
+15
Improved seed
50
200
150
Urea
2005
2006
Average input use per hectare (Kg/ha)
Total amount of fertilizer distributed (quintals)
Source: RFS project MLE survey, September 2014
33,856 156,000
Total cash credit
122,144
+6
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Next steps on systemic input credit interventions
• Scale up the input credit system in Amhara from 5 to 90 woredas
• Start pilot in three other regions: Tigray, SNNP and Oromia
• Automation of the system using technology to bring efficiency and to scale up
• Start a weather index insurance bundled with credit
Innovations to help our country grow