Fertilizer and Seed Sector Assessment in Niger

Table of Contents

Fertilizer and Seed Sector Assessment in Niger

1. Introduction

1.1 Methodology

1.2 Outline of the report

2. Fertilizer sector in Niger

2.1 Existing Mechanism of Fertilizer Purchase and Distribution

2.2 Fertilizer pricing under CAIMA

2.3 Fertilizer demand and supply

2.4 Non – CAIMA fertilizer sources through cross-border trade

2.5 Fertilizer cost build- ups

2.6 Limiting factors for private sector development to CAIMA fertilizer distribution

2.7 How to stimulate the private sector development in fertilizer market of Niger?

3. The seed value chain in Niger

3.1 Seed research, certification and quality control activities

3.2 Seed multiplication activities

3.3 Seed distribution activities

3.4 Other seed related organizations

3.5 Seed market status in Niger

3.6 Constraints in the seed value chain

List of Tables

Table 1 / Estimates on Fertilizer supplied by CAIMA (Metric Tons) / 8
Table 2 / Details of fertilizer importation costs / 9
Table 3 / Quantity of fertilizer supplied and prices of fertilizer supplied through subsidy programs in Burkina Faso, Togo and Ghana / 11
Table 4 / Existing registered private seed firms in Niger (2014/15) / 20
Table 5 / Quantity of certified seeds (R1&R2) produced (kg) and distributed for major crops in 2011/12 and 2014/15 / 24
Table 6 / Estimated certified seeds coverage under various crops in Niger (2014/15) / 24

List of Figures

Figure 1 / Area and production of major crops in Niger (2000-2014) (Mill Ha/ Mill Tons) / 2
Figure 2 / Existing System for Fertilizer importation and distribution in Niger / 6
Figure 3 / Public and private sector role(s) in the current seed systems in Niger / 16
Figure 4 / Existing seed system(s) for crops in Niger / 17
Figure 5 / Proportion (%) of certified seeds multiplied by seed stakeholders in in Niger / 19
Figure 6 / Quantity of Certified seed production (R1&R2) in Niger (2002/03 – 2014/15) / 23
Figure 7 / Yield of major cereal crops in Niger (2000-2014) / 25

Fertilizer and Seed Sector Assessment in Niger

1. Introduction

Niger is a land locked country with a total geographical land area of 126.7 million hectares.The current population is approximately 17 + million people, and given that itsannual population growth rate is 3.9 % (the sixth highest in the world) the population is projected to exceed 66 million by 2050. Nearly 40 percent of Niger’s GDP is derived from the formal agriculture sector, although it has a very low proportion of arable land (13 %) that is suitable for rain fed agriculture (FAO, 2013).The agro ecology of the country is characterized as arid and semi-arid climatic types, with a very short rainy season (June – September), receiving about 600 mm of annual rainfall (in northern part –the Sahel desert receives less than 150 mm annually). Hence the agricultural activity in Niger is mainly rainfed and highly vulnerable to climate induced hazards particularly drought. The total irrigated area in Niger is around 87,870 ha (AQUASTAT, 2010), which is less than 0.5% of the total cultivable area.

Niger is the fifth largest producer of uranium in the world, and production is likely to triple by 2018. Uranium remains an important determinant of the national economic outlook, accounting for about 50 percent of total exports. However, farming continues to be the main livelihood source for 80 % of the population in Niger. Millet and sorghum are the major rain fed subsistence crops providing more than 50 % of food source for human consumption in the country. Niger has one of the highest acreage of millet (> 7 million hectares), and an average annual consumption of 1.7 Million Tons, which is third highest in the world after India (9 Mt) and Nigeria (4.3 Mt). Agricultural production is characterized by two seasons: a rainfed season, which is determined by annual rainfall, and an irrigation season (also known as the off-season). Rainfed agricultural production is primarily for staple cereal crops, including millet, sorghum, rice, fonio, wheat, and commercial cash crops such as cowpea, peanuts, sesame, souchet, and onions. Off-season production includes rice, vegetables, and staple cereal crops.

Figure 1 Area and production of major crops in Niger (2000-2014) (Mill Ha/ Mill Tons)

Source: FAOSTAT, 2016

Millet, cowpeas and sorghum are the three most important crops accounting for 94 percent of cropland area (Figure 1). Millet is the strongly preferred staple food and domestic millet production accounts for about 76 percent of cereal production in the country. An estimated 90 percent of all cultivated land is devoted to millet.Niger is the second largest producer of cowpeas in the West Africa, after Nigeria. Cowpeas are used as both an export crop and as a source of animal feed. Demand for rice is increasing as consumption patterns evolve, particularly in urban areas. For example, per capita net rice imports increased from 8 kg in 2000 to 11 kg in 2011 (FAOSTAT 2014). Domestic rice production accounts for just over 30 percent of supply, and is produced primarily in the Kirtachi, Gotheye, Tillaberi, Gaya, and Sabon Machii (Maradi regions using rainfed, flood recession, and irrigation production systems. Other crops, namely maize and rice are not widely grown due to their high water requirements. However, maize and rice consumption has been increasing and consequently net imports (> 5000 MT of maize and 300,000 MT of rice are being imported) have been increasing since 2000. In Niger, the actual yield achieved by farmers is quite low—especially for cowpea,sorghum and maize, whose farmer yields are less than 50 % of the projected yield potential(Moussa et al, 2016). This shows that there is a huge potential for increasing yieldsand by extension, food security. Micro-dosing of fertilizers for rain fed crops and moisture conservation technologies along with good quality seeds are amongthe agronomic practices that could be used to simultaneously increase yields andreduce high-risk production in the Sahelian region (Tabo et al, 2009).

Niger is also a leading producer and exporter of onions in the region, with onion crops in the Tahoua region accounting for over 75 percent of national production. The onion industry is a key livelihoods source for farmers across the country, and domestic production averages 500,000 tons per year, much of which is marketed in West Africa through a commercial network that supplies coastal countries in the sub region. Nigerien households consume about five percent of national production (21,000 tons, or 4.4 kilograms per person per year). Onions are produced as the primary dry season crop (> 30,200 hectares cultivated), followed by okra, eggplant, and cabbage. Nigeria is a primary consumer of Nigerien cash crops, namely cowpea, groundnut, and souchet.

The fragile agriculture environment with frequent and extended droughts combined with high population growth rates pose a huge risk in terms of providing food security to the population. It is evident that Niger crop productivity levels are quitelow and there exists great potential for improving agricultural productivity, which has direct impact on the food security of the population. As elsewhere in sub-Saharan Africa, farmers in Niger have limited access to external inputs such as improved seeds and fertilizers to improve their productivity levels. In addition farmers in Niger face major constraints including: (i.) a lack of technical skills and knowledge about agricultural technologies;(ii.) poor market access; and, (iii.) above inadequate access to finances needed to purchase inputs. In this context, it is important to analyse the existing mechanisms available for distribution of fertilizers and seeds in Niger and make suitable recommendations either to streamline existing systems or to propose a series of new measures that will rectify the constraints on the efficient functioning of the input markets in Niger. The objectives of the current assessment include;

1. describe the input markets and demand and supply for seed and fertilizer in Niger;
2. identify the actors in the seed and fertilizer value chains and the constraints they face;
3. describe the mechanics of the existing fertilizer subsidy program;
4. develop a plan for streamlining the fertilizer distribution mechanisms with increased private sector participation; and,
5. provide recommendations to improve the effectiveness and efficiency of the seed and fertilizer value chain operations which will provide better delivery of inputs on a sustainable basis.

1.1 Methodology

The technical team of IFDC prior to the field assessment carried out detailed literature review through extensive desktop research. With the help of Millennium Challenge Program Coordination Unit colleagues in Niamey-Niger a preliminary list of stakeholders involved in agri-inputs distribution were prepared for consultations during the field trip. Further for sector specific (seed / fertilizer) related consultations, the IFDC team generated an additional list of local stakeholders involved in logistics and seed production. The field level assessment was implemented from February 7th to 12th, 2016 along with MCC-Niger staff.

During the country visit the teamconducted individual interviews as well as focus group discussions with a rage of stakeholders. These engagements included face-to-face meetings (interviews), and key informant surveys to gain a broad, detailed perspective of seed and fertilizer related issues in the country, the current context of development and key intervention points to strengthen the sector. The groups were well represented by government – Ministry of Agriculture officials, farmer association representatives, agro-dealers (retail and wholesale distributors), private seed firms, fertilizer importers, seed producers association, financial institutions, logistics firms, international organizations and research scientists. During the field trip, discussions were also held with farmers to get their perception on existing inputs demand and constraints in accessing inputs through the existing system. Detailed lists of stakeholders interviewed during the field trip are enclosed in the Annexure 1.

1.2 Outline of the report

Following this section, which provides the background of the study along with the objectives and methodology adopted, section 2 describes the current fertilizer distribution mechanism, presents the supply and demand situation for fertilizers and provides suggested recommendations to stream line the existing system and offera plan towards building an effective private sector based fertilizer sector in Niger. Section 3 provides a description of the seed value chain along with its stakeholders, supply and demand for seeds and the recommendations to improve the existing seed system. The final section presents the conclusions and policy implications concerning viable input distribution mechanisms in Niger.

2. Fertilizer sector in Niger

Fertilizer use in Niger is around 4 to 5 kg/ha, well below the continental average, which stands around 12 kg/ha and itself is well below targets for efficient and effective agricultural production. The target for 2015 fertilizer use adopted at the Africa Fertilizer Summit is 50 Kg/ha. In Niger fertilizers are mainly used for irrigated crops and to a very limited extent on rain fed crops. According to the FAO Report on République du Niger. Etude des fertilisants du sol. Rapport principalpublished in 2001, the percentage of farmers using fertilizer is more for vegetable crops (onions 80%, other veg 84%) than other irrigated crops such as maize and sorghum (35%), rice (60%) and very low for rain-fed crops as millet (1%), sorghum (5%) and cowpea (3%). The fertilizer market in Niger is very small (30,000 MT/year) compared to other countries in the region. For instance the neighboring countries such as Ghana and Burkina Faso consume an average of 250,000 MT/ year and Nigeria consumes more than 800,000 MT/ year. Niger is a land locked country and with its extensive geographical coverage, the logistics of importing and distributing to various parts of the country is not sufficiently remunerative for private firms to make investments in such systems.

2.1 Existing Mechanism of Fertilizer Purchase and Distribution

In order to improve fertilizer use by farmers in the country in 1978, Ministry of Agriculture created an exclusive agency called Central d’Aprrovisionnement (CA), to manage the fertilizers given by donors (South Africa, Nigeria, Japan etc.,) in a more efficient manner. In 2010-11, the CA became the Centrale d’Approvisionnement en Intrants et Matériels Agricoles (CAIMA) – a para-statal agency under the Ministry of Agriculture involved in distributing subsidized fertilizers and agri equipment (negligible quantities of seeds occasionally supplied through CAIMA) to farmers. CAIMA in addition to supply free fertilizers received by the donors also has an exclusive budget allocated by GoN forpurchasing additional fertilizers and farm implements for distribution to farmers through MINAGRI. The overall objective is to increase agricultural productivity and food self-sufficiency in Niger.

Objectives of CAIMA

• Respond to farmer demand for fertilizer not reached by donors, NGOs or the private sector.
• Ensure the quality of fertilizer products distributed through CAIMA.
• Making fertilizer available throughout all the regions of the country.
• Sell fertilizers at an affordable price to farmers by distributing at subsidized rates.

In the CAIMA mechanism, CAIMA plays a central role both as purchaser and distributor of fertilizer for the whole country. The flow of the fertilizer supply chain is as described in Figure 2 below.

• CAIMA purchases fertilizer through a national tender system, which allows only the participation of firms that are registered and that pay taxes in Niger – (mostly allows only citizens of Niger).

•CAIMA receives fertilizers from the selected importers according to the budget allocated by the Ministry of Finance.

• Upon importation, CAIMA distributes the fertilizer to central warehouses located in the 8 regions of Niger.

• Based on demand expressed by each region, fertilizers are further distributed through village administration offices or farmers associations or different donor sponsored or government aided projects (refer to figure below) by MINAGRI. At present 288 warehouses are identified as retail selling points in the country.
• MINAGRI agents from regional centers sell the fertilizer at subsidized prices and transfer the money to CAIMA

Figure 2 Existing System for Fertilizer importation and distribution in Niger

•Based on the amount collected through sales, CAIMA launches a new tender for additional quantities of fertilizer to import for the next season, following the same procedure.

• In general CAIMA calls for 2 to 3 tenders per annum, which corresponds to the dry and rainy seasons depending on cash availability.
• MINAGRI estimates the demand for fertilizers prior to the cropping season through its extension agencies network by collecting information from farmers’ organizations and farmers (agro-dealers or input networks of the seed firms; seed producers organization, individual commercial growers, farmers). The ministry then suppliesthem the required fertilizers.

The major weakness in this system is that the process of fertilizer procurement through CAIMA involves only few importers (max 4 to 5, such as AOM, Sahara, AFCOM, Soumaile ETS, Rimbo SARL) who have the financial ability to purchase fertilizer and sell them to CAIMA; with the payment made by CAIMA within 90-120 days. None of these firms have any prior professional experience in the fertilizer sector (most of them have business experience in rice importation, automobile, constructions or transportation businesses and often view the fertilizer import as a business opportunity with minimum or no risk).

2.2 Fertilizer pricing under CAIMA

As stated above, each year the GoN budget allocates a certain budget to CAIMA to purchase fertilizers for distribution. The amount of fertilizer to be purchased through imports is decided based on the demand estimates for the fertilizer requirement collected by the Ministry of Agriculture (MinAgri). The MinAgri extension services network estimates the demand for fertilizers prior to the cropping season by collecting information from farmers’ organizations, seed firms, seed producers’ organizations, individual commercial growers and commercial farmers. Based on such estimates, the Ministry of Finance allocates a certain amount of funding for fertilizer purchases. The Ministry of Agriculture also decides the level of subsidy and the amount of fertilizer to be imported each year. It should be noted that the government of Niger (GoN) has kept the fertilizer subsidy at the same price i.e. 13,500 FCFA/50 kg bag since CAIMA started its operations in 2011. During the year 2013, CAIMA wanted to increase the fertilizer prices but itwas prevented from doing so due to farmer protests. The subsidized price remains the same for all fertilizer products irrespective of their formulations (Urea, DAP, NPK) and without regard to transportation costs which may vary significantly across all 8 regions of Niger.

Payment to importers:CAIMA pays the fertilizer suppliers-importers between 1 to 4 months after fertilizer delivery. Currently only 4 or 5 firms supply fertilizers to CAIMA. From our discussions it was evident that these importers have sufficient financial strength to invest in the fertilizer importation business with less or no risk involved and they are able to make sufficient returns on this short-term investment. All the importers were satisfied with CAIMA on their terms of payment and did not have any complaints.

Payment for End users:Basically CAIMA sells all the imported fertilizer through farmers’ associations, projects sponsored by different NGOs and donors mainly to avoid engaging in a multiplicity of sales closer to a retail sales operation. Under this agreement, from the farmers’ associations or NGOs/donor projects, CAIMA can request a down payment of 50 % at delivery time and the remaining is collected at the harvest (3 to 5 months after the delivery). For regular and trusted clients a 100% cash payment can be agreed to by CAIMA. The individual farmers or small clients, who are not covered during the demand estimation time, but in need of fertilizer, can pay cash and register through their associations.

2.3 Fertilizer demand and supply

CAIMA remains the main structure to supply fertilizers in Niger. Three kinds of fertilizer are imported: NPK (15:15:15), DAP (18:46:0) and Urea (46:0:0). CAIMA imports the fertilizers through national private importers (4 to 6 of them); the distribution is done through extension agencies inregional offices that in turn supply to existing agri-input supplier networks, farmers’ association and village community based organizations. The estimated volume imported through CAIMA could be 30,000 MT per annum. The volume has been quite stable in the last 4 years (see table 1 below). In 2012/13 the volume is 45,000 Mt, which was composed of current imports plus the left over stock from the previous year 2011-12 due to late delivery of fertilizer and also severe drought. All the fertilizers imported through CAIMA are guaranteed for quality as they are tested at theNational Lab.