VZCZCXRO2354
PP RUEHMA RUEHPA
DE RUEHUJA #2169/01 3090801
ZNR UUUUU ZZH
P 040801Z NOV 08
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 4351
INFO RUEHOS/AMCONSUL LAGOS 0196
RUEHZK/ECOWAS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS SECTION 01 OF 02 ABUJA 002169 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EE/TPP/ABT/ATP SPECK 
DEPT PASS TO USTR-AGAMA 
TREASURY FOR PETERS AND HALL 
DOC FOR 3317/ITA/OA/KBURRESS AND 3130/USFC/OIO/ ANESA/DHARRIS 
USDA/FAS FOR MAURICE HOUSE, DOROTHY ADAMS 
 
E.O. 12958:  N/A 
TAGS: EAGR ECON ETRD EAID EFIN PGOV NI
SUBJECT: NIGERIA: SUBSIDIZED FERTILIZER RARELY REACHES FARMERS 
 
¶1. (SBU) Summary: Systemic corruption squeezes poor farmers' access 
to desperately needed fertilizer.  Despite Nigerian government (GON) 
claims to the contrary, subsidized fertilizer most often ends up in 
the hands of crooked and politically connected middlemen.  The final 
result is high fertilizer prices, poor farm yields and widespread 
corruption.  End Summary. 
 
Fertilizer Problem 
------------------ 
 
¶2. (U) On October 20, Minister for Agriculture and Water Resources 
Sayyadi Ruma told the media that failure to deliver fertilizer, 
seeds, chemicals, pesticides and tractors to farmers on a timely 
basis were largely the reason for poor agricultural yields. 
According to media reports, Nigeria ranks among the lowest per 
capita fertilizer consumers in the world.  Farmers use one million 
metric tons of fertilizer per year, while demand is 3.7 million 
metric tons.  Average worldwide rates are 93 kg per hectare and 
Nigeria is woefully behind with 13 kg per hectare. 
 
Who Gets the Fertilizer? 
------------------------ 
 
¶3. (U) The GON's inability to efficiently distribute subsidized 
fertilizer was a major constraint on grain production growth in 
¶2008.  Fertilizer is subsidized heavily by both the federal and 
state governments and all chemical fertilizer is imported.  The 
GON's fertilizer policy is that farmers and cooperatives directly 
receive fertilizer; however, in practice, subsidized fertilizer is 
often sold to middlemen with political connections (most who have no 
farming operations), who then resell into the open market at a much 
higher price, pocketing the difference.  According to agricultural 
experts, in 2008 subsidized fertilizer was sold by state governments 
between 1,000-2,000 naira ($8.50-$17) per 50 kilogram (kg).  Most 
farmers were unable to purchase subsidized fertilizer and had to buy 
it in the open market at prices between 4,500-5,000 naira ($38-$43) 
per 50 kg. 
 
¶4. (SBU) On October 15, EconOff and Agricultural Attach (FASOff) 
visited Golden Fertilizer Company Ltd (GF), one of three fertilizer 
importers with a contract to supply the GON.  GF has offices in Kano 
and Lagos, and imports fertilizer from the U.S., Ukraine, Russia, 
Spain, Greece and Trinidad and Tobago. (Note: The other two import 
companies are TAK Continental and Federal Super-phosphate Fertilizer 
Company Ltd. End Note.) In 2008 GF imported fertilizer that the GON 
distributed to state governments for resale at subsidized prices. GF 
commented that over 70% of subsidized fertilizer sold to the federal 
and state governments was resold onto the open market at predatory 
prices due to unethical distribution methods.  Despite the 
corruption, there were a small number of states such as Jigawa, 
where large amounts of subsidized fertilizer reached the farmers 
directly. 
 
¶5. (U) Fertilizer quality is also a major problem, according to 
agricultural experts.  Importers have reported that some companies 
are importing fertilizer, blending it down and adulterating it, then 
repackaging it in original or similar bags.  As a result, this 
fertilizer is much less potent and has resulted in many farmers 
complaining of poor yields after applying fertilizer.  Due to 
insufficient supplies and substandard fertilizer, among other 
factors, current corn yields in Nigeria remain at 1.5 metric tons 
per hectare, compared to nearly 10 in the U.S. 
 
Farmers Shift Planting Methods 
------------------------------ 
 
¶6. (U) Farmers employ different methods to cope with insufficient 
amounts and/or poor quality of fertilizers to maximize yields, 
including shifting the crops they plant, intercropping, or double 
cropping.  Reportedly in 2008 this has led to many farmers switching 
to plant more fields with grain crops, such as sorghum or rice, 
because these plants need less fertilizer.  Also more farmers are 
planting legumes such as groundnut or soybeans either directly 
between rows of mostly corn (intercropping) or directly after 
harvesting corn (double cropping).  Legumes put nitrogen back into 
the soil, lessening the need for fertilizer. 
 
The Future of the Fertilizer Business 
------------------------------------- 
 
¶7. (U) President Yar'Adua has highlighted the need for improving the 
agricultural sector in his Seven Point Agenda.  On October 21, 
 
ABUJA 00002169  002 OF 002 
 
 
Minister of Agriculture Ruma told the media that the federal 
government is considering ending direct fertilizer purchasing.  He 
said this policy shift would reduce inefficiencies and allow the 
private sector to import more and provide greater supplies. 
Concomitantly, the GON is "making efforts to promote private sector 
participation, private sector manufacturing of fertilizer" as well 
as provide "support and incentives that are needed to sufficiently 
empower farmers." 
 
¶8. (U) In 2005, the company Notore purchased the defunct National 
Fertilizer Company of Nigeria (NAFCON) plant near Port Harcourt. 
The company plans to produce half a million tons of urea initially 
and hopes to start up the plant at the end of 2008.  If the plant 
starts production a large number of Nigerian farmers would benefit. 
The plant would be the only urea fertilizer plant in Sub-Saharan 
Africa. 
 
¶9. (U) Comment: Limited availability of fertilizer for Nigerian 
farmers is a major constraint on growth in grain production.  The 
2008 harvest was better than 2007 but that was due to favorable rain 
patterns, not more fertilizer application.  Every year, the GON 
promises better fertilizer delivery, attention and resources for the 
agricultural sector; however, much of the benefit of subsidized 
fertilizer has yet to reach the farmers. 
 
¶10. (U) This message was coordinated with ConGen Lagos. 
 
SANDERS