Home Agriculture Ugandan Farmers Receive $2.9 Million in Fertilizer Aid from African Development Bank

Ugandan Farmers Receive $2.9 Million in Fertilizer Aid from African Development Bank

ugandan farmers receive 2 9 million in fertilizer aid from african development bank
ugandan farmers receive 2 9 million in fertilizer aid from african development bank
Share this News

The African Development Bank Group has given the green light for a project that aims to provide 60,000 metric tonnes of fertilizer to 400,000 smallholder farmers in Uganda. This initiative, funded with nearly $2.9 million (Shs10.8 billion) in credit guarantees and grant funding, falls under the Africa Fertilizer Financing Mechanism. The project’s objective is to enhance the accessibility and appropriate use of fertilizers by farmers, ultimately boosting agricultural productivity and improving food security in Uganda. The project will also establish connections between wholesalers, around 25 hub agro-dealers, and 125 retail agro-dealers who will distribute the fertilizer to farmers.

This development is a significant relief for Uganda, which has been grappling with a dwindling supply of NPK fertilizer since the onset of the Russia-Ukraine war. Prior to the conflict in February 2022, prices of NPK and other fertilizers were already high. The war further exacerbated the situation, leading to a 22 percent increase in international NPK prices from $714 (Shs2.7 million) to $869 (Shs3.2 million) per tonne by August 2022, according to the Makerere University’s Economic Policy Research Centre (EPRC).

The disruption in fertilizer supply not only raised input costs but also impacted plantation and large-scale crops like sugarcane, oil palm, maize, sunflower, and soybean, all of which require substantial quantities of inorganic fertilizers.

To meet agricultural growth targets, the 2006 African Union Summit Abuja Declaration recommended that African countries apply at least 50 kilograms of nutrients per hectare by 2015. This target has proven elusive for many countries, with variations in fertilizer use levels as evidenced in the 2018 World Bank report: 45kg/ha in Ethiopia, 146kg/ha in Malawi, 4.5kg/ha in Niger, 128kg/ha in Nigeria, and 16kg/ha in Tanzania.

Uganda, with its current average fertilizer use level of less than 2kg/ha, remains far from achieving this target. The 2019 Uganda Annual Agricultural Survey estimated that only 24 percent of farmers use fertilizers, a significant milestone for predominantly smallholder-based farming.

Although the African Development Bank Group’s credit guarantee offers a welcome relief by supporting increased fertilizer availability, the EPRC suggests that more measures should be considered. This includes revisiting plans to revamp the Tororo fertilizer factory, local production of fertilizers, and creating a national food reserve system to stabilize food supply and prices.

Uganda’s reliance on wheat imports, notably from Ukraine, also took a hit due to the Russia-Ukraine war. Imports from Ukraine significantly declined from $10 million (Shs37.3 billion) in December 2021 to zero in January 2022, before recovering to $2 million (Shs7.5 billion) in September 2022. This trend led to higher domestic wheat prices, impacting consumers of wheat-related products. Between March 2022 and February 2023, the Consumer Price Index (CPI) for wheat flour increased by 22 percent, while the CPI for chapatis, a local wheat flour product, increased by 16 percent.

Wheat is a crucial intermediate input for various food-based businesses in Uganda, used in the production of bread, biscuits, and related products. Uganda, in 2020, imported $119 million (Shs443.4 billion) worth of wheat, making it the 69th largest importer of wheat globally. Major sources of wheat imports included the Russian Federation ($41.9 million), Argentina ($31.3 million), Ukraine ($15.1 million), Germany ($13.8 million), and Lithuania ($4.83 million).

Russia was the fastest-growing import market for wheat in Uganda between 2019 and 2020, followed by Germany and the Czech Republic.