Agricultural Inputs

During 2021 and 2022, global food and fertilizer prices spiked due to several overlapping factors. Demand rose as the world economy emerged from the COVID-19 recession; global supply chains suffered major disruptions associated with the uneven recovery; and the outbreak of war between Russia and Ukraine—both key food and fertilizer producers—generated yet another shock.

Since the 1950s, Malawi has used a national fertilizer subsidy program as a way to spur use of inorganic fertilizers, boost domestic maize production, and ensure food security and self-sufficiency for smallholder farmers. According to new working paper from the Malawi Strategy Support Program, however, the national subsidy program may not be the most efficient investment for improving the country’s food security and domestic production goals.

Africa’s agricultural sector has the potential to drive important economic growth and development in the region. Agriculture accounts for 16 percent of Africa’s annual GDP and employs over half of its labor force, particularly youth and women workers. Despite the sector’s vast potential, however, African agriculture remains hampered by low resource productivity and little or no value addition; shocks like climate change, ongoing regional and local conflict, and supply and market disruptions resulting from the COVID-19 pandemic and global conflicts have only exacerbated these challenges.

Global fertilizer markets experienced significant price surges beginning in 2020 and through 2022 due to a combination of factors, including higher natural gas prices, supply chain disruptions triggered by COVID-19, trade disruptions due to the Russia-Ukraine war, and export restrictions. Although parallel increases in international agricultural commodity prices may have cushioned these price shocks, insufficient availability and affordability of fertilizers are likely to have affected yield and profitability of smallholder production systems.

Extreme weather events and the long-term impacts of climate change pose a major risk for Africa south of the Sahara, threatening agricultural production and economic growth and hindering efforts to reduce poverty and food insecurity. Climate-smart agricultural practices (CSAPs) can help farmers better adapt to and mitigate these risks; however, the adoption of such practices in the region remains low.