By Jimoh Babatunde
The issue of fertilizer handling by government in the past generated lots of criticism as genuine farmers did not benefit from government subsidies which run into billions of naira yearly.

The involvement of government in the distribution of fertilizer in the past was said to have bred corruption with only 11 per cent of farmers reported to be actually getting the subsidized fertilizers.

In the past, private sector fertilizer suppliers and manufacturers get orders from the government and the government asked that manufacturers deliver to states at 25 per cent subsidy.

The state governments “distribute” fertilizer to farmers occasionally adding their own subsidy and at the end, only 11 per cent of fertilizer reaches the intended farmers.

To stop this rot in the system which  continually enrich  government officials to the detriment of the  real farmers who are peasants, the  present  leadership of the Agriculture  ministry  led by Dr. Akinwumi Adesina set out to find a new distribution  method.

Today, that search has given birth to the Private sector distributed fertilizer support system, utilising Input Vouchers.

With the private sector taking the lead in the distribution channel of fertilizers, it means the  agro dealers will sell fertilizer to farmers at market price “minus” the fertilizer voucher discount provided by government.

The federal and state governments will coordinate to distribute fertilizer vouchers to targeted farmers with the hope that 94 per cent of actual farmers receive the subsidized fertilizer under the voucher programme.

The policy change which   was accepted by the Federal Executive Council (FEC) last week under the Growth Enhancement Support (GES) programme seeks to encourage the critical actors in the fertilizer value chain to work together to improve productivity, household food security and enhance income of the farmer.

The federal and state governments will contribute to the Voucher Programme on equal basis. This year, the Federal Government’s growth enhancement support will be N13.5 billion for fertilizer and the states’ will be N13.5 billion.

The Growth Enhancement Support Scheme (GES) target beneficiaries through the electronic system called electronic wallet which is one where the farmers will get allocation for seeds and fertilizers by their mobile phones without any intermediary.

According to the Minister of Agriculture: “The farmer is getting a subsidy of 50 per cent and the farmer will pay the balance of 50 per cent, then collect their seeds and fertilizers and the transaction is completed and no money has changed hands.”

The system works with the federal and state governments releasing their cash to the Ministry of Agriculture that register the farmers on the field, the registered farmers, targeted at 20 million, will have funds released to their wallet account.

Those farmers who received their fund on their wallets will visit agro dealers appointed by fertilizer suppliers to redeem their support amount.

The farmers then use their mobile to request for fertilizers which the agro dealers will supply to them.

The key Wallet processes are identification of farmers and mapping of farms into a comprehensive database to identify target farmers and data about farms and identification and mapping of Agro-input dealers.

The identification of agro dealers will enable the ministry map demand based on the farmers in their territory, just as banks have visibility of same info and can therefore make credit line/loan decisions.

The deposit of GES funds in trust accounts s – technology allows tracking of cash movement and reporting of the same as farmers receive money in Mobile Wallets.

Money received on mobile wallets can only be spent on fertilizer and seeds as everyone on the value chain is able to see relevant data – therefore allowing intelligent demand / supply decisions to be made.

The Federal Government has provided Sovereign Guarantee on financing of seed and fertilizer supply in the 2012 farming season through the Federal Ministry of Finance.

A tripartite Memorandum of Understanding (MOU) for financing the supply of seed and fertilizer to farmers in the 2012 farming season was signed between the Federal Ministry of Finance, Federal Ministry of Agriculture and Rural Development and 25 participating money deposit banks (financiers).

In the MOU, the Federal Government provided the following: Guarantee covering 70 per cent of the loan principal payment under the programme.  The financiers (banks) will give loan facility to participating seed companies and agric input dealers at 7 per cent interest rate.

Adesina revealed that the CBN has raised N30 billion in guaranteed loans for the commercial banks for the benefit of the farmers.