1.1 Introduction
Fertilizer subsidies stimulate domestic fertilizer production which goes a long way to ensure adequate and timely supply, save foreign exchange and promote economic development. Fertilizer subsidies offset policy induced market distortions that either increase fertilizer price or reduce output prices. Taxes on imports/exports or other implicit or explicit taxes on agriculture and subsidies on developed countries’ agriculture that often result in unfair competition (Pender et al. 2004). Fertilizer subsidies also safeguard against transaction costs and risks associated with institutional weakness and market failures that otherwise put farmers in an under-developed trap (Dorward et al., 2004). Fertilizer subsidies therefore shield farmers and other consumers from the high risks associated with volatile world market prices.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
During the early days of fertilizer subsidies in Africa South of the Sahara, several types of fertilizer promotion programmes existed that have been tried previously, each of which has its pros and cons Gregory & Bumb (2006). Such fertilizer structures were characterized by a lot of complexities worldwide. The structure therefore varied from one country to another depending on the immediate cause that necessitated the coming into being of the particular subsidy. After the 2008 food and fertilizer prices crisis, fertilizer subsidies have become all the more popular as governments have felt the urge to quickly improve domestic food production. This was made possible because governments were now able to use direct budget support from donors who were previously reluctant to support such expenditure (Kelly et al., 2011).
According to Minde et al., (2008) & Tiba (2009), smart fertilizer subsidies are meant to address the shortfalls of universal subsidies. The final outcome of the input subsidy program as a means of promoting the agricultural industry is intended to improve farming efficiency. Agriculture is a critical sector for many developed and developing countries around the world because it employs the majority of the rural population and contributes significantly to income generation, Gross Domestic Product (GDP), foreign exchange earnings, and food needs for an ever-increasing population. Providing fertilizer subsidies to farmers through a reduced market price ensures fertilizer availability, which is expected to influence farm level efficiency and production.
FAO (2015) estimates that global food production must increase by 70 percent by 2050 to feed an additional 2.3 billion people, eighty percent of the increase in production in developing countries will have to come from improved crop yields and production, thus making it pertinent for the government to subsidize fertilizers in order to be affordable for farmers.
According to Camara & Heinemann (2006) stated emphatically that no country in modern history has made great strides in agricultural production without first increasing the use of fertilizer through subsidies. Several studies have found that one-third of the production of cereals worldwide is due to subsidized fertilizer and other related factors of production, while other scholars have stated that the only real cure for land hunger in West Africa is to increase production.
Well-planned fertilizer subsidies were the secret behind the success of the Green Revolution, which swept through Asia and Latin America in the 60s and 70s. For instance, whereas in 2002-2003, Sub-Saharan African farmers used an average of 9 kg of fertilizer per ha of arable land, fertilizer subsidies enabled fertilizer use to reach as high as 100kg/ha in South Asia, 135kg/ha in Southeastern Asia, and 73kg/ha in Latin America (Future Agricultures, 2010; Wiggins & Brooks, 2010).
This resulted in a situation where agricultural production and productivity soared in Asia and Latin America during the last four decades, but stagnated in Africa, resulting in a rising dependency on imported grains and an increase in the number of undernourished people. The revival of fertilizer subsidies came along with innovations in design seeking to avoid the downsides of past programmes which were characterized by high costs, poor targeting and displacement of the private sector.
Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Perception of Farmers’ on the Effectiveness of the Fertilizer Subsidy Programme.
1.3 Statement of Problems
Investigation revealed that fertilizer subsidy programme was the registration of farmers to give them entitlement to the subsidized fertilizer by way of pass books. The registration, according to the beneficiaries, was limited to the district capitals and communities around the District capitals, thus denying farmers in the hinterlands the right to benefit from the subsidy.
There is also subsidy fraud of various kinds including counterfeiting and the creations of secondary markets are also common with the use of vouchers. Issues on design and implementation, economic efficiency and equity considerations have been less studied and results are less conclusive.
Finally, apart from the system of delivery and administration of coupons being too cumbersome and bureaucratic, there were no clear-cut criteria for the allocation vouchers. It is therefore important that beneficiaries’ perceptions of the effectiveness of the subsidy in the study area of the design and implementation procedures be considered in the evaluation. The failure of earlier evaluations to take the views of beneficiaries into consideration as part of their evaluation therefore constitutes a wide gap which has to be filled, hence this research.
1.4 Aim and Objectives of Study
The aim of the study is to examine the Perception of Farmers’ on the Effectiveness of the Fertilizer Subsidy Programme using Warri-South Local Government Area, Delta State as a case study. In achieving this aim, the following specific objectives were laid out as follows:
- To examine the level of participation of farmers with the fertilizer subsidy programme in the area under study;
- To evaluate the level of satisfaction of farmers with the fertilizer subsidy programme in the area under study;
- To find out farmers’ perceptions about the weaknesses and strengths of the programme in the area under study; and
- To determine whether fertilizer subsidy programme was effective enough to bring increase yield in agricultural product since its introduction in the area under study.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- Is there any significant difference between male and female farmers’ perceived effectiveness of the fertilizer subsidy?
- What is the level of participation of farmers with the fertilizer subsidy programme in the area under study?
- What is the level of satisfaction of farmers with the fertilizer subsidy programme in the area under study?
- What are the farmers’ perceptions about the weaknesses and strengths of the programme in the area under study?
- What is the fertilizer subsidy programme was effective enough to bring increase yield in agricultural product since its introduction in the area under study?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: The level of farmer’s satisfaction about the fertilizer subsidy programme is low in the area under study.
- H1: The level of farmer’s satisfaction about the fertilizer subsidy programme is high in the area under study
Hypothesis Two
- H0: Fertilizer subsidy programme has not been effective to bring increase yield in agricultural product since its introduction in the area under study
- H1: Fertilizer subsidy programme has been effective to bring increase yield in agricultural product since its introduction in the area under study
1.7 Significance of Study
The relevance of this research will provide guidance for future programme designers and implementers to come out with more pragmatic fertilizer subsidy programmes. The result of the findings would be used to reinforce the strengths for sustainability as well as taking corrective measures to address the weaknesses and/or shortfalls of the current fertilizer subsidy programme in the area under study.
This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.
1.8 Scope of Study
The scope of the research is focused on the Perception of Farmers’ on the Effectiveness of the Fertilizer Subsidy Programme using Warri-South Local Government Area of Delta State as a cases study.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
1.10 Definition of Terms
Perceptions: Perceptions, opinions and attitudes have been used interchangeably. In this study is used to mean farmers views on, or assessments of the FSP.
Fertilizer Subsidy: Fertilizer subsidy is commonly understood to mean direct budgetary support payments made by government to lower the farm gate prices of fertilizers.
