The Myth of E-Voucher Schemes for Enhanced Fertilizer Use
This story, written by Benjamin Kwasi Addom, is cross-posted from USAID's Global Broadband and Innovations (GBI) portal. Benjamin highlights the recent Ag Sector Council, "Voucher Schemes for Enhanced Fertilizer Use: Lessons Learned and Policy Implications."
The future use of the information and communication technologies (ICTs) such as e-vouchers in delivering subsidized fertilizer (or other inputs) to farmers in the current information age is blurred due to the very high cost involved in setting up such systems and the anticipated power/energy problems. This was one of the revelations made by experts from the International Fertilizer Development Center (IFDC) and the World Bank during the January 2012 USAID’s Agriculture Sector Council Seminar held in Washington DC.
Ian Gregory, a consultant from IFDC spoke on the subject “Voucher Schemes for Enhanced Fertilizer Use: Lessons Learned and Policy Implications” and David Rohrbach, a Senior Agricultural Economist at the World Bank shared his experiences from eastern and southern Africa remotely from Tanzania on the subject “Opportunities and Risks of Fertilizer Voucher Programs.”
The speakers argued that based on their earlier experiences, using ICT-based systems to facilitate fertilizer delivery through the subsidy programs can be very expensive. This includes the initial cost of establishing such a system as well as maintenance cost due to the absence of ICT infrastructure and low ICT human resource level in their respective areas of operation. Also anticipated is the lack of power or energy (electricity) in the communities that these inputs are distributed.
This revelation came in at the time when the World Bank had just launched an eSourcebook on ICTs in Agriculture with a comprehensive list of innovative practice summaries that demonstrate success and failure in interventions. Among them is the use of an electronic voucher system in Zambia, an initiative that was reported in 2010. The system is currently being piloted by the United Nations World Food Program (WFP), CARE International, and the local Conservation Farming Unit (CFU) with support from Mobile Transactions (a company specializing in low-cost payment and financial transaction services). The e-voucher system empowers smallholders to obtain subsidized inputs from private firms (giving the firms, in turn, an incentive to expand and improve their business).
Fertilizer subsidy programs
Giving the background to the fertilizer voucher schemes, Ian stated that while the traditional fertilizer subsidies were an integral policy tool of the Green Revolution in the 1960′s, excessive fiscal costs and risks, late delivery, rent-seeking, political economy and patronage, rationing, lack of equity and efficiency, and displacement of the private sector led to the demise of these subsidies in the 1980s. But the fertilizer subsidy programs have resurfaced in the last ten years as a results of high international fertilizer prices.
David from the World Bank Tanzania also identified some of the risks associated with the program as vouchers (or fertilizer) being distributed late; vouchers redeemed by agents distributing the fertilizer; counterfeiting vouchers (or fertilizer); vouchers redeemed for cash; price inflation: greater demand than fertilizer supply (top-up or subsidy grows); number of target recipients grows faster than population; and over-reporting of production.