Fertilizer Subsidy Programme in Ghana: Evidence of Performance after Six Years of Implementation

Abstract

This study relied mainly on production data from the Ministry of Food and Agriculture, Ghana and FAOSTATS between 2007 and 2012. Comparative and relative analysis of secondary data on the annual evolution of fertilizer subsidy budgets with total crop production and area expansion trends were used to assess the usefulness or otherwise of the programme. Ghana’s fertilizer subsidy programme still seems to be ineffective almost six years after commencement. Since inception in 2008, a total of GH¢202.5 million has been invested. The evidence however suggests that little has been achieved by way of output growth that can be attributed to fertilizer use. Although the relationship between crop output and budget spending on subsidy was generally positive, it was not significant even at the 10% level, thus weakening the possible impact of the subsidy programme and corroborating claims that most of the recorded growth in agriculture is due to land area expansion as opposed to yield increases. This study alludes to the increasing interest that sustainability concerns must be factored into such subsidy programmes. There is therefore the need for government audit the current programme and fashion out better implementation strategies, possibly adopt the smart approach which has been shown to be more focused and result oriented.

Keywords: Subsidy, smart subsidy, fertilizer, food crops, industrial crops, cereals, vegetables, sustainability