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PRIVATIZATION OF FERTILIZER SUB-SECTOR

A WORKING PAPER
DATED; FEBRUARY. 1994
PRIVATIZATION OF FERTILIZER SUB-SECTOR
A WORKING PAPER

Report Prepared by

Alhaji M. Liman (Team Leader)

Prof. O. Ogunfowora
Prof. J. Y. Yayock
Prof. R. A. Sobulo

Fertilizer Procurement and Distribution Division

Federal Ministry of Agriculture, Water Resources and Rural Development


Lagos, Nigeria.

February, 1994
TABLE OF CONTENTS

Pace

Table of Content i

List of Tables iii

List Appendices iv

Abreviations and Acronyms V

I Introduction 1

1.1 Terms of Reference 4

II Fertilizer Demand and Supply 5

2.1 Fertilizer Demand 5

2.2 Fertilizer Supply 5

2.2.1 Fertilizer Production Strategy 6

2.2.2 Structure of Fertilizer Supply 6

2.2.3 Allocation of Fertilizer to Major Agro-Ecological-Zones 7

III Fertilizer Distribution and Marketing in Nigeria 8

3.1 Objectives of Fertilizer Distribution and Marketing Policy 8

3.2 Historical Background of Fertilizer Distribution in Nigeria 9

3.3 Warehousing Infrastructure 10

3.4 Management Information system 11

3.5 Fertilizer Distribution Planning 14


IV Fertilizer Pricing «ind Subsidy policy 15

4.1 Fertilizer Pricing 15


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4.2 Fertilizer Subsidy 15
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4.3 Farm Gate Cost of Fertilizer and Rate of Subsidy 17 ;!


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4.4 Fertilizer Subsidy Level 20 U

4.5 Administration of Subsidy and Beneficiaries 22

V Fertilizer Research and Extension Policy 24

5.1 Fertilizer Research 24

5.2 Fertilizer Extension 25 1

VI Privatization of Fertilizer Operations 26

6.1 Historical Perspective 26


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6.2 Recent Efforts at Privatization 29

6.3 Summary of Options for Privatization of-Fertilizer Operations 31 if

Appendix 38 i:l
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LIST OF TABLES
] Table

] Sources and Structure of Fertilizer Supply


in Nigeria (1987-1994)
G 3.1 States Fertilizer Storage Capacities, 1989

4.1 Subsidized Farm Gate Prices of Fertilizers, 1989-1994


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4.2 Cost of Fertilizer ByType (US $/MT)
] 4.3 Components of Farm Gate Cost and Rate of Subsidy

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ABBREVIATIONS AND ACRONYMS

FAO - Food and Agriculture Organization of the United Nations

SAP - Structural Adjustment Programme

ADP - Agricultural Development Project

APMEU- Agricultural Project Monitoring and Evaluation Unit

FPDD - Fertilizer Procurement and Distribution Division

FSFC - Federal Superphosphate Fertilizer Company Ltd

SSP - Single Superphosphate

NAFCON- National Fertilizer Company of Nigeria

DAP - Diammonium Phosphate

PDP - Primary Distribution Point

FSC - Farm Service Centre

NRC - Nigerian Railway Corporation

LGA - Local Government Area

MIS - Management Information System

ASC - Agricultural Service Centre

ICB - International Competitive Bidding

IBRD - International Bank for Reconstruction and Development

CAN - Calcium Ammonium Nitrate

BSP - Boronate Superphosphate

MOP - Muriate of Potash

K A S C O - K a n o A g r i c u l t u r a l S u p p l y C o m p a n y L t d .
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LIST OF APPENDICES
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Fertilizer Allocation to States (1991-1994) MT

Studies Relating to Fertilizer Privatization

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BASAC- Bauciii State Agricultural Supply Company

FASCOM- Farm amd Agricultural Supply Company

IFDC- International Fertilizer Development Centre

FAIMCO- Fertilizer and Agricultural Inputs Marketing Company *


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NCA - National Council for Agriculture

NEPA - National Electric Power Authority

NSC - National Supply Company

NFC - National Fertilizer Centre

NFCC- National Fertilizer Coordinating Committee

NFTC - National Fertilizer Technical Committee

FMAWR&RD- Federal Ministry of Agriculture, Water Resources and Rural Development

FACU- Federal Agricultural Coordinating Unit

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CHAPTER I

INTRODUCTION

Nigeria is becoming increasingly deficient in the production of food and agro-industrial


raw materials. This deficiency is attributable to many factors amongst which are
uncontrolled population growth and very slow rate of growth in agricultural output and
productivity.

The proposition was advanced to the effect that the solution to the deteriorating food and
fibre supply in Nigeria lies in the adoption of strategies which combines demand
management policies with accelerated improvement in agricultural development. With
respect to the latter strategy, the FAO study "Agriculture: Towards 2000" indicated that
there was very limited scope for horizontal expansion of output in many developing
countries largely because of their low technological capabilities to cultivate new arable
lands. The study estimated that 72% of the required increase in production would have
to come from intensification of existing farm lands and 28 percent from the cultivation
of new arable lands. — '

Based on many years of field trials, scientists have also come to accept the fact that, of
all the factors promoting agricultural growth, fertilizers hold the key to accelerated
agricultural production and productivity in the short-run, and general improvement in soil
fertility in the long-run. It is in recognition of this that successive Nigerian governments
have, over the years, put in place policies and programmes to stimulate the supply and
demand for fertilizers.

In Nigeria, the fertilizer policies which have been in operation in the past decade include:

1) Supply policy, consisting of production and procurement.

2) Distribution and marketing policy.

3) Pricing and subsidy policy.

4) Fertilizer research and extension policy.

The objectives of these policies can be summarized as follows:

i) to develop stable and efficient production, procurement, distribution and


marketing systems for fertilizers;

ii) to reduce the farm gate cost of fertilizers so as to motivate a large scale and
widespread adoption;

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iii) to ensure that farmers earn reasonable profit margin by lowering costs and
increasing yields through improved agronomic efficiency due to fertilizer use;

iv) to encourage balanced nutrient use consistent with agronomic requirements of_
crops in different agro-ecological zones and long-run maintenance of soil fertility.

Despite the application of these policies, however, the fertilizer subsector programmes
are still largely inefficient even though some improvements had been made in the
promotion of fertilizer consumption as well as the adoption of improved fertilizer
management practices by farmers.

As the level of consumption increased, distribution and marketing activities became too
complex and the capacity of institutional arrangements to cope with the demands of
efficient distribution became inadequate at best. Some of the factors affecting efficiency
and cost effectiveness in the fertilizer subsector in Nigeria can be summarized as follows:

1) Leakages, port wastages, shortlanding and transit losses in the distribution system
all of which, in recent times, have assumed unmanageable proportion.

2) Inadequate and untimely supply; artificial scarcity and black marketeering


developed and smuggling across national borders thrived.

3) Inadequate and untimely release of funds, resulting in erratic importation pattern


which is inconsistent with steadily growing demand for fertilizer in Nigeria.

4) Lack of commercial orientation in the execution of procurement and distribution


functions.

5) Procurement and distribution systems are wasteful and cumbersome because


growth in demand often exceeds the capacity of government institutional
arrangements for fertilizer procurement and marketing.

6) Erratic and uncoordinated ship arrivals minimize the potential for effective
distribution planning, resulting in higher distribution cost which has become a
burden to government.

7) Uncoordinated distribution results in inadequate coverage.

As a result of these problems, the growth in fertilizer use among the small holder
farmers has been severely constrained with adverse consequences on national food
security system and industrial growth.

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Arising from all the above, and following from the experiences of the last decade, there
seems to be a growing consensus that the existing arrangements can no longer efficiently
and effectively procure and distribute fertilizers to the farmers. Therefore, the structure
and the application of the existing fertilizer policies need to be significantly modified and
fine-tuned in order to make fertilizer a potent and cost effective instrument for raising
Nigerian agricultural production and productivity.

In particular, policy makers and the farming population have come to the realization that:

i) the approach to fertilizer distribution and marketing needs to be revitalized and


redesigned to operate in a competitive environment;

ii) privatisation/commercialization and private sector participation in fertilizer


operation is crucial to the maximization of efficiency and cost effectiveness.

The recognition of these needs was reflected in the 1988 and 1989 Presidential Budget
speeches which stated, inter alia: "The Federal Government has, therefore, decided to
terminate its involvement in fertilizer procurement and distribution with effect from
1990/91 cropping season and hand these activities completely over to the private sector".

From the above statement, it is clear that government has been under considerable
pressure to make fundamental changes that could improve the efficiency of the fertilizer
subsector. Regfettably, however, no concrete decision and action had been taken to
back-up government resolve as expressed in the budget speeches of 1988 and 1989.
Thus, the status quo remains and the attainment of self-sufficiency in food and fibre has
become an illusion.

However, consistent with the philosophy of the Structural Adjustment Programme (SAP)
which emphasizes deregulation and the superiority of market forces, and given the
dwindling financial resources of government, as well as the characteristic nature of the
fertilizer distribution system, government can no longer remain indifferent to the
inadequacies of the fertilizer subsector. It is in the above context that government is
seriously considering, the privatization of fertilizer procurement and distribution. It is
envisaged that privatisation will maximize efficiency, reduce cdst and all categories of
losses, black marketeering and illegal border trade, as well as make fertilizers available
to farmers in the right place, kind and quantity and at appropriate prices.

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Terms of Reference

In order to provide an operational framework for the conceptualization and


implementation of the privatisation programme there is a need to:

1) Prepare a report on the historical development in the fertilizer sub-sector, with


particular emphasis on fertilizer procurement, distribution and marketing, demand
and supply, pricing and subsidy.

2) Make a comprehensive appraisal of the past and current attempts at privatizing


all the activities in the fertilizer sub-sector.

3) Assess, based on 1-2 above, and in the light of present Nigerian circumstances,
whether the need is to update the existing studies in support of privatisation or
conduct new studies, draw up appropriate terms of reference and make
recommendations.

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CHAPTER II

FERTILIZER DEMAND AND SUPPLY

Fertilizer Demand

In recent years, Nigerian fertilizer consumption has been increasing steadily, due, partly,
to modest improvement in procurement and distribution, intensive extension activities in
the World Bank Assisted Agricultural Development Projects (ADPs) and through the
application of subsidy. However, reliable data on aggregate annual fertilizer
consumption are difficult to obtain because of poor record keeping by all the agencies
involved in fertilizer procurement, distribution and marketing. There are no recent
studies on actual consumption level; demand is usually estimated from sales and requests
from states and agencies. In most cases, however, inaccurate records of sales and
stocks, inflated requests from states and agencies and smuggling across national borders,
often lead to gross over-estimation of fertilizer demand.

The only study on fertilizer consumption was undertaken by Agricultural Project


Monitoring and Evaluation Unit (APMEU) in 1990, as part of the Fertilizer Procurement
and Distribution Division’s (FPDD) preparations for 1991 fertilizer procurement
programme. The study showed that fertilizer consumption pattern was unsteady,
declining from 806,800 product tonnes in 1988 to 641,000 product tonnes in 1989, and
then increasing to 774,000 product tonnes in 1990. But FPDD reports showed that
supplies during corresponding periods were 750,000, 900,000 and 1,314,000 product
tonnes, respectively.

Since a correct assessment of demand is an essential pre-requisite of a privatized fertilizer


subsector, there is a need to develop a scientific approach to estimating annual fertilizer
requirements in the country.

Fertilizer Supply

There are two major sources of fertilizers supply in Nigeria, viz, domestic and imports.
While local production of fertilizers has been making steady contribution to national
needs, the country still depends on imports to meet the bulk of its fertilizer requirements.
However, the scarcity of foreign exchange often led to erratic and, sometimes,
inadequate supply. Local production is bound to increase in the near future given the
increasing government’s commitments to the exploitation of natural gas (for nitrogen
fertilizers) and phosphate reserves for use as fertilizers, and the increasing enthusiasm
in private-sector participation in bulk-blending.
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2.2.1 Fertilizer Production Strategy

The objective of production strategy is to develop domestic production capacity to meet


a significant proportion of growing demand, thus conserving foreign exchange as well
as ensuring increased supply of fertilizers.

To achieve this objective, two major fertilizer plants have been built. The first was the
Federal Superphosphate Fertilizer Company Limited (FSFC) in Kaduna which was
designed to produce 100,000 tonnes of Single super phosphate (SSP) annually. The
second fertilizer plant was the National Fertilizer Company of Nigeria (NAFCON) in
Onne, Rivers State. It is an Ammonia Urea complex with an annual capacity of about
750,750 tonnes of product (Urea, DAP and compound fertilizers). It came-on stream in
1987 and had been producing at full capacity to date. The construction of NAFCON
phase II, of about the same capacity as phase I, is in progress in River State.

A recent development in the Nigerian 'fertilizer production scene was the installation of | ■
bulk blending plants in Kaduna, Maiduguri, Kano and Minna. The establishment of bulk 17
blending plants was designed to increase domestic production. It led to the expansion t:
of national fertilizer productive base and permitted flexibility in formulating fertilizer
types specific to the crop and edaphic requirements of different agro-ecological zones. j,
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2.2.2 Structure of Fertilizer Supply
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Table 2.1 shows the structure of fertilizer supply from 1987 to 1994. The table shows j<.
that domestic supply increased steadily from 365",500 product tonnes in 1988 to a peak
of 800,000 tonnes in 1992, while imports which shows considerable variation from year K
to year increased from 384,500 tonnes in 1988 to 845,000 tonnes in 1993 and was
projected to reach a maximum of 850,000 tonnes in 1994. In all, aggregate supply ||
increased from a minimum of 750,000 tonnes in 1988 to a maximum of 1,650,000 tonnes I-
in 1994.

Given the current efforts at expanding domestic production base,, there are indications ib
that the country will be self sufficient in fertilizer production in no distant future. As |jj
will be shown later in this report, the present and future structure of fertilizer supply
therefore, has implications for the choice of the privatization option to adopt. }•
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Table 2.1: Sources and Structure of Fertilizer Supply ill Nigeria (M.T) (1987 - 1994)

Year Import Domestic Total Domestic as %


Supply Supply of Total
Supply
1987 829,750 p 829,750 -

1988 384.500 365,500 750,000 49

1989 400,000 500,000 900,000 56

1990 706,000 608,000 1,314,000 46

1991 400,000 600,000 1,000,000 60

1992 610,000 800,000 1,410,000 57

1993* 845,000 745,000 1,590,000 47

1994* 850,000 800,000 1,650,000 49


* FPDD estimate.

Source: Composed from FPDD and Peat Marwick Fertilizer Distribution Monitoring
Reports.

2.2.3 Allocation of Fertilizer to Major Agro-Ecolopical Zones

Appendix 1 shows the pattern of fertilizer allocation to States between 1991 and 1994.
The table shows that fertilizer supply to states varies, depending on crop hectarage and
agronomic requirements of crops in different agro-ecological zones of the country. An
analysis of the spatial pattern of distribution revealed that the 17 northern states and the
Federal Capital Territory, Abuja, consistently accounted for an average of 75 percent of
total allocation each year, while the 14 southern states accounted for only 25 percent.
This pattern of allocation was premised on the fact that about 70 percent of food crops
hectarage was located in the northern axis. Also, the greater diffusion and adoption of
fertilizer use consequent upon the intensive extension activities of the ADPs in states like
Kano, Kaduna, Bauchi, Sokoto, Borno, Yobe, Adamawa, etc; explained the pattern of
allocation. s

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CHAPTER HI

FERTILIZER DISTRIBUTION AND MARKETING IN NIGERIA

In order to promote efficient fertilizer use in Nigeria, at least five major constraints must
be removed, namely:
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i•? i) inadequacy of fertilizers;

- ii) lack of knowledge about correct fertilizer use at farmers level;

iii) lack of credit;


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iv) unfavourable fertilizer-product price relationships; and

4 v) untimely and inefficient distribution.

Modern distribution-and marketing systems are needed to resolve these constraints.


1 Prior to the World Bank fertilizer loan taken in 1983, public fertilizer distribution and
marketing system, controlled, regulated and supervised by government, predominated in
Nigeria. The justifications for government intervention at that point in time were two
1 fold, namely:

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i)

ii)
to ensure availability of fertilizer on time, and at fair prices throughout the
country; and

to promote increased consumption through educational and promotional activities


of government agencies.

3.1 Objectives of Fertilizer Distribution and Marketing Policy

The major objectives of fertilizer distribution and marketing policy are as follows:

i) to maximize distribution efficiency and reduce cost;

ii) to make fertilizer available to farmers in the right kind, place, quantity, cost and
time; and

iii) to enhance farmers financial capability to purchase fertilizers.


Historical Background of Fertilizer Distribution in Nigeria

Prior to 1976, individual State government ordered fertilizers in bulk and distributed
them through sales agents and extension services of the State Ministry of Agriculture.
Each State Ministry managed its fertilizer matters independently. This arrangement was
plagued by numerous problems, the most serious of which included the following:

States made separate importation arrangements; thus large differences were


observed in the prices paid by different states for the same fertilizer brand.

Fertilizer orders from different states arrived at the seaports at the same time,
leading to bunching of ships, and causing great difficulties in the coordination of
berthing'and ports clearance. Many vessels incurred demurrage as a result of the
resultant delays.

There was little control over quality and types of fertilizer imported and the
quality of packaging materials.

Subsidy administration was difficult to effect.

Fertilizer price differentials among States led to the development of a "black


market" and inter-state flow of fertilizer.

In 1976, the Federal Government centralized the procurement and distribution of


fertilizer. The Fertilizer Procurement and Distribution Department (FPDD) was created
as a division of the theui Federal Ministry of Agriculture, to formulate and coordinate all
fertilizer related policy issues at the national level. The FPDD collated the States
fertilizer requirements, prepared allocations based on available finances, placed orders
for the fertilizers and distributed them to States’ central depots. From the central depots,
the States moved the fertilizers to the various Agro-service and Farm Service Centres
(FSC) from where the farmers purchased fertilizers. The first fertilizer plant, the
Federal Superphate Fertilizer Company (FSFC) Kaduna came on stream also in 1976 and
FPDD also distributed the fertilizers to States directly from the plant.

The mode of transportation to any particular state or PDP depends on relative


economies, transit time, and availability of wagons and trucks. Fertilizer is transported
to the states and PDPs mainly by road, using trucks and sometimes by rail from factory
gates and ports. FPDD had the responsibility for transporting fertilizers to the state
depots prior to 1986. Transportation was by rail, road and water. The rail and water
transport had limitations which made road transport the most reliable means of fertilizer
transport. The major issue then was the intermodal mix. In order to reduce
transportation problems, which ranged from delay in the settlement of transport claims
to excessive transit and storage losses, the responsibility for fertilizer transportation was

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transferred to the States/Agencies through a Federal Government’s directive in 1986.
The States thereafter arranged to collect their fertilizers from the seaports/plants to their
respective primary distribution points (PDPs) and farm service centres (FSCs).

The transport costs to the states would be re-imbursed by the Federal Government.
States/Agencies were thus offered the opportunity not only to reduce cost through
negotiation of favourable rates with transporters, but also to divert trucks from the
ports/plants to depots nearest to the farmers as well as select the mode of transport most
effective for the individual state. This directive had the potential for considerable savings
in the cost of distribution but many states did not tap this potential. States and Agencies
were able to exercise some control over their transporters, holding them responsible for
any transit losses and non-deliveries to designated depots. States and Agencies had
greater flexibility in planning and managing deliveries directly to some of their PDPs and
FSCs. However, there were considerable variations among states in distribution
efficiency and cost-effectiveness. Thus, the total cost of fertilizer distribution was still
very staggering.

In 1991, the policy on distribution was modified somewhat by the creation of six depots
in Minna, Gombe, Lagos, Port-Harcourt, Funtua and Makurdi where fertilizers were
deposited from ports and plants for onward distribution to states contiguous to the depots.
The system was found to be inefficient due to huge losses through multiple handling,
storage losses, leakages etc. The enroute delivery system was introduced as_a
modification to the depot system whereby fertilizers were delivered directly to states
enroute the designated depots. This reduced the total system cost to some extent, but the
problems of losses and late and non-deliveries persisted.

In 1992, the distribution policy was further modified whereby FPDD took responsibility
for distributing imported fertilizers to the states while NAFCON assumed responsibility
for distributing all fertilizers procured locally. * The depot system was abandoned and
deliveries were made directly to designated depots in the states by FPDD and NAFCON.
Intra-state distribution became the responsibility of the ADPs and/or the state Ministries
of Agriculture. The mode of transportation was and is still currently by road only.

Warehousing Infrastructure

One of the pre-requisites for efficient fertilizer distribution is the availability of


warehousing infrastructural facilities. The magnitude and spatial distribution of such
facilities determine the ease and the depth of penetration achievable by the distribution
system. Thus, the implementation of fertilizer privatization policy will have to capitalize
on the existing warehousing facilities (private and public) in the country.

Two levels of fertilizer storage exist in the country, namely^ FPDD storage and
State/Agency storage. FPDD storage was, up to 1990, mainly located at seaport towns
of Lagos, Port Harcourt and Calabar. The storage facilities were being used for
temporary warehousing pending evacuation and transportation up-country. FPDD
currently maintains storage facilities of varying capacities at designated buffer stock
depots in Gombe, Funtua, Makurdi, Abuja and Lagos with a combined capacity of
120,000 tonnes. In addition, a new depot has just been opened in Keffi.

A survey of State/Agencies fertilizer storage facilities carried out in 1989 revealed that
the total storage capacity available was about 908,545 tonnes (Peat Marwick, 1989).
The distribution of storage facilities based on the twenty-one states structure is presented
in Table 3.1. While problems of neglect and poor maintenance might have adversely
affected some of these facilities, some states would have increased their fertilizer storage
capacity by building additional warehouses. It may, therefore, be necessary to conduct
an inventory of the fertilizer warehousing infrastructure currently available in the country
in order to determine the national fertilizer storage capacity that would be available to
support.any privatization programme.

Management Information System (MIS’)

In recent years, FPDD has come to realize the importance of an efficient MIS to the
successful implementation of fertilizer operations. It, therefore, established procedures
to identify the bottlenecks and information gaps in the chain of fertilizer procurement and
distribution operations. The major areas where such procedures have been put in place
include demand assessment, procurement, shipping, port discharge and dispatch
operations, deliveries to States and buffer stocks depots.
Table 3.1: States’ Fertilizer Storage Capacities. 1989

State No of LGAs Total Storage Capacity


(Tonnes)
1. Abuja 4 3,240
2. Akwa-Ibom 20 6,570
3. Anambra 29 28,100
4. Bauchi 19 57,100
5. Bendel 20 166,000
6. Benue 19 27,000
7. Borno 19 56,150
8. Cross River 8 76,400
9. Gongola 21 46,500
10. Imo 30 14,850
11. Kaduna 13 63,000
12. Kano 46 86,300
13. Katsina 9 78,000
14. Kwara 14 3,545
15. Lagos 12 2,080
16. Niger 10 15,860
17. Ogun 12 22,160
18. Ondo 21 48,350
19. Oyo 42 21,000
20. Plateau 16 41,600
21. Rivers 14 7,140
22. Sokoto 37 ' 37,600
Total > 435 908,545
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Source: Survey By Peat Marwick Ani Ogunde Consultants on the fertilizer stores in
Nigeria, 1989.

in the case of physical monitoring, two firms of management consultants were appointed
in 1992, one to monitor the distribution of imported fertilizers and the other to monitor
the distribution of locally procured fertilizers. With respect to imported fertilizers,
monitoring was designed to achieve the following:

a) elimination of demurrage on most of the ships discharged up to date;


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b) timely completion of invoicing of ship discharge and deliveries to states, agencies


and buffer stock depots;

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c) identification and quantification of various categories of fertilizer losses;

d) significant reduction in the level of all categories of losses through effective


supervision of all aspects of port operations of inter-state distribution;

e) documentation and monitoring of allocation of empty bags;

f) accurate estimation of shortlanding through effective supervision and


documentation of ship discharge operations;

g) preparation of ship completion reports highlighting the quantity and types of


fertilizers lifted by each transporter for delivery to the states and buffer stock
depots;

h) a computerized management information system designed to aid decision making


at all levels of operation; and

i) preparation of monthly reports which provide:

information on fertilizer despatches and deliveries to the states and buffer stocks
depots from all vessels fully discharged;
information on how well the states’ requirements have been met in terms of
quantity and types of fertilizers;
the basis for the determination of the quantity of fertilizers due to be delivered
and actual delivery by each transporter, thus providing the framework for the
calculation of transporters’ performance rating and entitlement;
a full listing of undelivered fertilizers by' transporters and those for which the
quantity delivered was less than the quantity stated on the waybill; and
the states with relevant information for monitoring fertilizer allocation and
deliveries to them.

Significant progress has been made towards the maximization of efficiency in port and
inter-state distribution operations based on the installed MIS. However, the gains of this
improvement may be frittered away through the current pervasive inefficiency in intra­
state distribution due to lack of effective monitoring at this level. As at now, intra-state
distribution, which is currently the responsibility of the states, is largely chaotic,
permitting of varying degrees of leakages, artificial scarcity, black marketeering and high
farm gate prices of fertilizers. There is, therefore, a crying need to improve intra-state
distribution in order to maximize total system distribution efficiency and ensure that
fertilizers get to the grassroots in the right quantity, at the right time and subsidized
prices. ~ ...
Fertilizer Distribution Planning

Distribution planning by FPDD is geared towards ensuring adequate and timely supply
of fertilizers to farmers. However, its effectiveness was impaired by the general
procurement problems as well as the funding constraints to support distribution.
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Certain factors like lack of adequate funding and baseline consumption data on demand
and inflated requests by States, hamper systematic distribution planning. Often, planning
of distribution to States was completed prior to budgetary request; but delays in the
actual release of funds usually complicated and thwarted arrival schedules leading to ill-
timed arrivals of shipments. The demands of the agricultural areas often became
secondary to the simple necessity of moving the products. Even in situations where
funding ultimately was sufficient, the lead time available was not adequate to allow for
the adoption of possible cost minimization distribution strategies. At the State level,
distribution planning involved the delivery of whatever that came from FPDD through
their ASCs, FSCs and private retailers. In order to save costs, States diverted fertilizer
lorries from the plants and ports directly to relevant PDPs and FSCs. Distribution
approach differed among States; while the States generally had central warehouses for
receiving fertilizers from FPDD, some tried to save costs through the elimination of
central depots.

There is a need for the early completion of the processing of fertilizer ordering and the
release of back-up funds to ensure that fertilizers arrive at the ports for distribution to
the states ahead of the on-set of the rains. In addition, proper scheduling of ships’
arrival at the ports need to be carried out to ensure optimal utilization of berthing and
fertilizer discharge facilities at the ports, as well as the slim fleet of roadworthy trucks
owned by fertilizer transporters. Only through the synchronization of procurement-and
shipping schedules with distribution planning can this be achieved; otherwise; the
problems of demurrage, temporary ware-housing, transloading and transit losses may
persist.

The above exposition is designed to highlight the intricacies and problems of the current
fertilizer distribution operations in Nigeria. It thus provides the framework within which
a privatized fertilizer system can plan and rationalize its distribution system in order to
maximize efficiency and cost effectiveness.
CHAPTER IV

FERTILIZER PRICING AND SUBSIDY POLICY

Fertilizer pricing and subsidy policy has been one of the major instruments of agricultural
development in Nigeria. In general, the roles of fertilizer pricing and subsidy policy are
as follows:

1) To reduce cost, of fertilizer to farmers so as to increase value-cost ratio and thus


motivate large scale fertilizer use.

2) To facilitate the growth of fertilizer and other agro-industries.

3) To encourage balanced nutrient use consistent with agronomic requirements of


crops in different agro-ecological zones.

4) To encourage fertilizer distribution to remote areas of the country^----------~

5) To use subsidy as a means of income distribution to the less privileged rural


populace.

6) To encourage the production of certain essential commodities through the


application of different subsidy levels.

Fertilizer Pricing

The basic approach to fertilizer pricing in Nigeria is to maintain a low price so as to


increase the value cost ratio which, in turn, provides the necessary economic incentive
to induce expanded use of fertilizer. Over the years, a uniform countrywide retail selling
price has been maintained for the same type of fertilizer and varying levels of subsidy
have been applied from year to year, depending on the exchange rate regime and the
magnitudes of other components of total costs of fertilizer operation. It was the belief
of policy makers that the maintenance of uniform pricing system throughout the country
will minimize or completely eliminate substantial movements of fertilizers across state
borders.

Fertilizer Subsidy

The application of fertilizer subsidy in Nigerian agriculture was usually justified on the
ground that:

i) there was need to channel resource allocation to farmers along specific lines that
maximize net social benefits; and
ii) it was necessary to encourage farmers who were not using fertilizers at all to use
it; and those using it at sub-optimal levels to increase their rate of use.

The justification for fertilizer subsidy is particularly strong in Nigeria where a large percentage
of farmers are yet to adopt the use of fertilizer and where most of those who use fertilizer still
do so at sub-optimal rates. In a situation like this, both private and social net benefits from
fertilizer use are normally very high, especially when yield-boosting complementary inputs are
also' available for use along with fertilizer.

In the Nigerian context, fertilizer is aimed at small-holder farmers and the implicit assumption
is that they receive the full benefit by paying the official subsidized prices. The proponents of
heavy fertilizer subsidy believe that, in a food deficit country like Nigeria, subsidy should be
seen as a means of providing small scale, capital starved farmers with the essential ingredients
to increase their productivity and thus produce beyond family requirements. They also see it
as a means of resource allocation which recognizes the potential contribution of small holder
farmers, who by virtue of their low socio-economic status, have limited access to modern inputs
and technology, and are unorganized to command attention to their pressing problems. Subsidy
is, thus, a means of income redistribution to the less privileged rural populace in order to
enhance their socio-economic welfare.

On the other hand, the advocates of subsidy reduction envisage that, as consumption increases,
subsidy would, in fact, become a major constraint not only to the fertilizer programme, but also
to national agricultural development. Thus, a phased reduction of subsidy is strongly
recommended for the following reasons. First, the cost of fertilizer subsidy, is becoming too
burdensome in relation to government’s dwindling financial resources. Second, low prices of
fertilizer, coupled with limited supplies and inefficient distribution system, will encourage the
development of ‘black market’ at substantially higher prices while low prices will encourage
inefficient use and smuggling across national borders. - Third, policy makers, and the World
Bank in particular, believe that prolonged application of subsidy might induce insatiable demand
for subsidy.

Other points raised against the application of subsidy can be summarized as follows.

a) the presence of fertilizer subsidy is largely responsible for market distortions and the
consequent failure of price to perform its desired role as an efficient allocator of scarce
resources; '

b) the presence of subsidy has greatly dampened private initiatives in the fertilizer
production and distribution systems, which lead to substantial value-added losses in the
economy;

c) administration of fertilizer subsidy creates immense leakages in the agricultural economy


as most of it flow to unintended recipients.

page 16

*
Table 4.1: Subsidized Farm Gate Prices of Fertilizers. 1989-1994
\

FERTILIZER N/MT
TYPE r
1989 1990 1991 1992 1993 1994
NPK (ALL TYPES) 300 400 800 800 1,600 3,000
UREA 300 400 800 800 1,600 3,000
DAP 300 400 800 800 1,600 3,000
SSP 240 340 600 600 1,200 2,200
CAN 240 340 600 600 1,200 2,200
MOP 240 340 600 600 1,200 2,200 l>
BSP 240 340 600 600 1,200 2,200

i
Source: Composed from FPDD Reports.

The astronomical increase in the farm gate cost of fertilizer is attributable to a


combination of factors. First is the steady increases in procurement cost (both local and
imports) which, using imported NPK 15:15:15 in Table 4.2 as an example, increased by
11 percent between 1990 and 1991; 5.8 percent between 1991 and 1992 and 2.7 percent
between 1992 and 1993. A more disturbing trend is the higher cost of locally produced
fertilizers. For example, NPK 15:15:15 and NPK 20:10:10 procured from local plants
cost more than imported brands in 1989 through 1993 (Table 4.2). The cost of locally
produced fertilizers increased more sharply -and recorded, for the same brand of
fertilizer, an increase of 21.4 percent between 1989 and 1990, but remained constant
between 1992 and 1993.

Second, the cost of procurement is a function of the exchange rate regime since all j;
purchases, both local and imports, are denominated in dollars. Since 1989, the £
contractual exchange rates had been rising. It was N7.6 to the'dollar in 1989; N7.8 in
1990; N9.6643 in 1991; N18.6 in 1992 and N24.99 in 1993 and N22 in 1994rfhus~
the farm gate costs of fertilizers will be increased or decreased by the extent of the
depreciation or appreciation in the value of the Naira. For example, the cost of
procuring 150,000 tonnes of NPK 15:15:15 from local plant in 1992 at the exchange rate
of N18.6 to the dollar, and at a price of $255.8 per tonne, will be N245.184m lower
that the cost of procuring the same quantity in 1993 when the contracted price and l
exchange rate are $255.80 per tonne and N24.99 to the dollar,s respectively. It thus !
means that if all other factors remain constant, major devaluation of the naira would
increase the subsidy burden. The discontinuation of the use of International Competitive
i
page 18
i.
Table 4 •2 • Cost of Fertilizer By Type (US $/MT)
1
1989 19*? ° I . 19 91 ' 1 992 1993 1 994

F e r t i l i z e r Type IMP LOC IMP LOC IMP LOC IMP LOC IMP LOC IMP LOC

CAN 151 .3 - 146 ** - 162.6 - N/A N/A


- - - -
126.85*
i

UREA 158.0 160 - 145.0 - | 171.10 - 168.19 - 168.19 N/A N/A

SSP 147..4 193 146.0 273.42 162.06 261.57 169.0 248 180 N/A N/A

BSP - - 148.0 - - : - 181 .0 - - - tl It

- - - • - - - - - tt M
DAP -

tl
MOP 162.8 - 161.0** - 178.71 - - - - - It

144.5*
NPK 1 5 -1 5 - 1 5 218.35 230 212.0 279-24 235.32 269^36 249.0 2 55.8' 252 255.8 ft tt

NPK 27-13-13 326.58 342.5 326.79 n It


- 305 - - - 326.79

.2 4 9 .0 252 n
NPK 25-10-10 - - - 250.76 - 241.89 229.71 229.08 tl

206.0 228.66 230*. 69 - 219-08 - 219.08 n It


NPK 20-10-10 210.0 - -

NPK 20-10-10-1Zn 206 295 - 298.73 - 325.04 - 310.69 - - rt tt

tt
NPK 20-10-10*-Zm2S - - - 308.86 - - - 306.67 - 310.69 tl

NFK 20-10-5+10*Ca - - - - - . - - - - 285 it tl

NFK 12-12-17+3^0 213.95 - 208.0 - 230.88 245.0 - 298 tt tt

* World B a n k
** L e tte r o f C re d it
LOC = Local
IM P = Im p o r t
s Not A v a ila b le
So u rce : FPDD
Bidding (ICB) procedure for procurement of imported fertilizers since the expiration of
the World Bank fertilizer import loan in 1986 deprived Nigeria of substantial savings in
procurement cost often associated with the use of ICB.

The farm gate cost of fertilizer is also a function of the distribution costs which have
been rising astronomically in recent years due to inefficiencies in the distribution system,
the deteriorating value of Naira with its attendant inflationary pressure and, consequently,
incessant demand for increases in freight rates. For example, the freight rate per tonne
of fertilizer from Lagos to Kano which was N647.50 in 1990 and 1991 had to be
increased to N 1295.0 per tonne due to exchange rate induced inflationary pressure on
operating costs in the transportation industry. To the extent that" freight~rates are
increasing astronomically, farm gate costs of fertilizers and, hence, subsidy burden will
also correspondingly increase.

4.4 Fertilizer Subsidy Level

Given the projected supply level, the procurement cost, the exchange rate regime, and
the levels of other components of farm gate costs of fertilizer (particularly distribution
cost) from 1989 to 1994, Table 4.3 shows that the total system cost increased from
N1.72 billion in 1989 to N7.9 billion in 1992; N9.4 billion in 1993; and to a projected
level of N 13.7 billion in 1994, while the burden of subsidy increased from N 1.47 billion
in 1989 to about N6.8 billion in 1992; N7.2 billion in 1993; and is projected to escalate
to N8.92 billion in 1994. The table shows that the subsidy level is variable during the
period under review, ranging from a minimum of 74.04 percent in 1991 to 86.27 percent
in 1992; 76.81 percent in 1993 and projected to decline to 65.00% in 1994 as a result
of the substantial increase in the official price of fertilizer. As explained earlier, the
observed variability in the levels of subsidy can be attributed to the instability in the
various components of total farm gate costs, namely, procurement and distribution costs
and handling charges, all of which are, in turn, impacted by macro-economic variables
such as exchange rate regime, cost of capital and government policy decision on subsidy.

At the prevailing and projected levels of demand, it was envisaged that fertilizer subsidy
would, in fact, become a major constraint not only to national fertilizer programme, but
also to national agricultural development. In 1994, for example, the proposed fertilizer
budget of about N13 billion is significantly higher than the budgetary allocation of
N3.97 billion to the agricultural sector. Thus, a phased reduction or complete
elimination of subsidy is currently being canvassed so as to release funds for the
development of other subsectors of the agricultural sector. However, the points of
controversy which need to be scientifically investigated are, firstly, the magnitudes and
time path of subsidy reduction that will not drastically reduce fertilizer consumption to
the detriment of agricultural production and, secondly, ’ the most appropriate
organizational arrangement and mechanism for and point of administering fertilizer
subsidy that guarantee maximum effectiveness. These issues need to be addressed in any

page 20

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Table 4.3 • Components of Farm Gate Cost and Rate of Subsidy

I terns 1989 (H ) 1990 (H ) 1991 t H) 1992 (K ) 1 993 m ! 1994 (S )

T o ta l cost of Procurement 1,406,668,000 2,189,864,000 2,435,320,000 6,142,418,430 7,648,446,260 11,£44, 8 2 U , 000


!
Procurement 1,562.96 1,666.56 2,435.32 4,356.33 5,502.48 ! 6,815-04
Cost/MT
D is tr ib u tio n Cost ( In t e r , 255,384,000 549,744,660 469,473,090 1 ,573,981 ,440 1,558,721,537 1 ,962,638,832
and In t r a )

D is tr ib u tio n Cost/MT 283.76 418.37 469-47 1 ,116.30 1,156.07 j 1,189-48

*0Lher Handling Charges 62,514,000 91 ,270,440 69,460.000 195,877,200 193,096,686 513,062,325

Other Handling Charges/MT 69.46 69.46 69.46 138.92 138.92 310.95

T o ta l Farm Gate Cost 1 ,724,566,000 2,830,879,100 2,974,253,090 7,912,277,070 9,400,264,483 13,720,525,157

Cost/MT (/bag)’* 1 ,916-18(95.8)* 2 ,1 5 4 .4 0 (1 0 7 .7 )* 2,974 . 25(148.7)' 5,611.54(280.6)* 6,762.78(338.1)* 8,315-47(415.77)'

Total s a le s revenue a t
subsidized farm g ate p ric e 257,400,000 506,700,000 772,000,000 1 ,086,000,000 2,180,000,000 4,80 2,800,000 '

**Weighted average farm


gate Price/MT 286.0 385.62 772.0 770.21 1 ,568.35 2,910-79

Level o f Subsidy 1 ,467,166,000 2,324,179,000 2,202,253,000 6,826,277,000 7,220,264,483 3,9)7,725,157

Subsidy/MT 1,630.18 1 ,768.78 2,202.25 4,841.33 5,194.43. 5,404.68

%Level o f Subsidy 85.07 82.10 74.04 86.27 76.81 65. 00

** Various types o f f e r t i l i z e r
* Cost o f In s u ra n c e , Po rt charges, C le a rin g and Forw arding, W arehousing, M onito rin g , U t i l i t i e s , T ra in in g and Seminars/Workshop,. V e h ic le s
fo r M o n ito rin g and D is t r ib u t io n , R e s id e n tia l Accommodation R e n ta ls , S to re s item s (S u p p lie s ) and C o n tin g e n cie s.
Exchange R ates - H/IUS$: 1989 = 7 .6 ; 1990 = 7 .8 ; 1991 = 9-6643; 1992 = 18.6; 1993 = 24.99; 1994 = 22.00.

( )* UnsubsiJfeed P r ic e per bag.


•• <M

J >1

'Jk

• h proposed privatization scheme.

n
?—i
The experience in the past five years has revealed that when the price of fertilizer was
increased more than proportionately to the increases in the price and yields of crops, the
value-cost ratio was depressed and farmers’ rate of fertilizer use adoption was
considerably dampened. This was partly due to the fact that the improvements in the
other output promoting factors were not significant enough to offset the negative effects
3
of subsidy redaction.

it would appear, therefore, that subsidy reduction should be phased and the level can be
significantly reduced by, among others, improvement in procurement and distribution
efficiency, maintenance of a stable and realistic exchange and interest rates and by raising
the official price paid by the farmers.

Reduction in procurement cost can be achieved through the use of International


Competitive Bidding procedure (ICB) while distribution cost can be reduced by
rationalizing freight rates as well as adopting more efficient intermodal transportation
mix.

Increase in official price can be successfully accomplished, with minimal adverse


consequences on consumption, if the increase in price is accompanied by among others,
rising crop prices, improvement in agronomic efficiency, easy credit, effective
implementation of agricultural insurance scheme. However, a scientific approach to
subsidy reduction should be evolved which will not dampen farmers enthusiasm to use
fertilizers and undermine the current agricultural development efforts. As a protective
measure, however, each announcement of fertilizer price increase should be preceded by
a review of the effect of earlier price increases,on consumption.

Currently, total subsidy is supposed to be shared equally among the Federal, State and
local governments, but in reality the states would appear to carry higher burden because
of the cost of intra-state distribution which is not fully incorporated into the calculation
of subsidy level. Also, the administrative cost of the FPDD is not often reflected in the
estimation of total farm gate cost of fertilizer. Accordingly, subsidy level is somewhat
underestimated.

4.5 Administration of Subsidy and Beneficiaries

As at now, there is a tacit acceptance by government to continue to subsidize fertilizer.


This position is understandable in view of the mounting opposition to any drastic
reduction in subsidy at this point in time. In fact, the worsening ,food and fibre supply
situation, and the sub-optimal level of fertilizer use in Nigeria, dictate that nothing should
be done to discourage fertilizer use.

page 22

..................... •'> ■ * ; • > * y# ' ■'*-


\

A critical appraisal of the subsidy programme reveals that the complexity of production,
procurement and distribution arrangements has been a major constraint to the effective
administration of fertilizer subsidy. There is the implicit assumption that all the fertilizer
subsidy goes to the farmers, but in reality this is not the case.

The inefficiency in the distribution system and the untimely and inadequate availability of
fertilizer encourage:

(a) the proliferation of middlemen;

(b) the creation of artificial scarcity through non-deliveries of fertilizer by transporters;

(c) the existence of a situation of glut co-existing with scarcity in many locations due to
wrong allocations of fertilizer types by officials, and deliveries to unauthorized locations
by transporters.

As a result of all the above, the prices farmers pay are much higher than the official prices
approved for different types of fertilizers. Micro-level studies by the Agricultural Planning,
Monitoring and Evaluation Unit (APMEU) revealed that actual prices were, on average,JiOjo.
75 percent higher than official prices. During the early months of 1993, however7 the farmers
pay an average of N 150 to M200 for a bag of 50kg fertilizer, depending on the type of fertilizer
and location of purchase. The official price was N30 per bag for low nutrient fertilizers and
N40 per bag for high nutrient fertilizers.

The merchants and middlemen, including the transporters, are the major beneficiaries of
fertilizer subsidy. Transporters’ share of subsidy arises from illegal sales of undelivered
fertilizers and the high and uncompetitive freight rates which the government granted in 1992.
An increase in freight rates is currently being canvassed and may be granted again in 1994. It
is also conceivable that local'producers derive some benefits from fertilizer subsidy. The failure
of government to regulate producers’ margin through the application of normative cost concept
inadvertently permits domestic plants to make what appears to be high profit through charging
factory gate prices which are, in most cases, higher than landed costs of imported fertilizers.

page 23

&
CHAPTER V

FERTILIZER RESEARCH AND EXTENSION POLICY

5.1 Fertilizer Research

Fertilizer research policy was designed to focus on the development of fertilizer


recommendations for different agro-ecological zones. Programmes were designed to
improve agronomic efficiency through the use of better seed varieties, fertilizer types and
management practices.

In its effort to improve fertilizer use efficiency and stimulate consumption, the Federal
Government set up a body, NFCC, in 1983 to give advice on fertilizer policy issues. A
technical committee, NFTC, was established in 1985 and charged with the responsibility,
for setting up guidelines for fertilizer use. The executive arm of NFTC, the National
Fertilizer Centre (NFC), whose initial programmes were jointly developed by IFDC and
Nigerian Scientists, was set up in 1987 with the following objectives:

(a) To collect and document information on soils and fertilizer use and development.

(b) To generate information on efficiency of fertilizer use through linkages with


Research Institutes, Universities and Agricultural Parastatals in the country.

(c) To provide technical information on fertilizer types to be produced by


manufacturers for Nigeria.

(d) To provide guidelines for and organize^testing of new fertilizer products.

(e) To set up quality control (reference) laboratories for analysis of soil, plants and
fertilizer.

(f) To organize regularly seminars, workshops, symposia and such fora on fertilizer.

The field activities of NFC have helped in no small measure to advance fertilizer use
development policy in the country. Details of the achievements of the Centre are
contained in the publications of the Centre but a brief summary is presented below:

1. Soil Characterization and Soil Fertility Map

Major soil types in Nigeria have been characterized and classified using USDA
and FAO classification systems. Soil fertility map of the country for Nitrogen,
Phosphorus and Potassium deficiency status had been developed. This
classification led to the development of broad fertilizer recommendations for the

page 24

A
various agro-ecological and climatic conditions.

2. Soil Fertility Response Studies

The Centre had carried out fertilizer response studies on benchmark source in five
geographical zones of Nigeria. The testing of three Nitrogen sources from 1988-
1990 provided the scientific bases for specific recommendations regarding the use
of granular urea produced by NAFCON. The studies provided the justification
for the policy not to import Calcium Ammonium Nitrate (CAN) and the need for
the use of lime at the rate of 1/2 - 1 tonne/ha in every three years. Fertilizer rate
studies also led to the development of suitable fertilizer formulation for various
agro-ecological zones.

3. Development of New Fertilizer Formulations

As a result of the activities of the Centre, the regional based and the blanket
approach to fertilizer recommendation was replaced by new formulations based
on crop nutrient requirement, soil nutrient deficiency and nutrient ratio
requirement by crops. The development of the new formulations has resulted in
improvements in agronomic efficiency and reduction in production cost.
Significant savings have also been made in distribution cost as the development
of high analysis fertilizers resulted in a reduction in the transportation of bulky
materials.

4. Publications

The results of activities of the Centre are disseminated through publications which
are widely circulated. Such publications, include the literature review on soil
fertility in Nigeria published in five volumes; proceedings on National Seminars
of fertilizer use between 1988-1990 and proceedings of workshop organized by
NAFCON on fertilizer use efficiency in 1990-1991.

Fertilizer Extension ■

In respect of fertilizer extension, solid foundation is currently being laid for effective,
nationwide fertilizer extension activities through the establishment of statewide ADPs.
The provision of infrastructural facilities, the encouragement of cooperative marketing,
the establishment of farm service centres where fertilizers, seeds, credit, chemicals and
other complementary inputs are readily available, the intensive extension teaching method
through demonstration and farm visits etc. will all provide a framework within which
fertilizer extension activities can be effectively carried out, particularly within a
privatized fertilizer marketing system.
CHAPTER VI

PRIVATIZATION OF FERTILIZER OPERATIONS

Historical Perspective

Prior to the World Bank fertilizer loan taken in 1983/84, public fertilizer distribution and
marketing system, controlled, regulated and supervised by government, predominated in
Nigeria. The justification for government intervention were two fold, namely:

1. to ensure availability of fertilizer on time, and at fair prices throughout the


country;

2. to promote increased consumption through educational and promotional activities.

The distribution and marketing of fertilizer was centralized and executed through the
Fertilizer Procurement and Distribution Division (FPDD). Primary distribution at the
retail level was vested in the State Ministries of Agriculture, the World Bank-Assisted
Agricultural Development Projects (ADPs).

During the loan period, procurement and distribution operations were still vested in
FPDD, but secondary and tertiary distributions were introduced and vested in State
Ministries of Agriculture, the ADPs through their network of primary distribution
points, farmers cooperatives and some input distribution and marketing companies such
as Farm and Agricultural Supply Company (FASCOM), Kano Agricultural Supply
Company Ltd. (KASCO), Bauchi State Agricultural Supply Company BASAC etc. Over
the years, however, experience revealed that, as the level of consumption increased,
distribution and marketing activities executed under public institutional arrangement could
not accommodate the degree of privatization as envisaged.

Arising from all the above shortcomings, the Fertilizer Loan II 'Mission concluded that:

i. the approach to fertilizer distribution and marketing needed to be broadened and


revitalized to operate in a competitive environment;

ii. commercialization of and private-sector participation in fertilizer marketing was


crucial to the maximization of efficiency and cost effectiveness;

iii. fertilizer distribution operation should be based on transportation, storage and


inventory management optimization model;

iv. a viable credit programme was needed to eliminate financial constraints to the
purchase of fertilizers by farmers.

page 26

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Following from the above, the challenge was to find ways and means to induct private
sector into all facets of fertilizer programme, viz production, imports and distribution,
without subjecting the system to any abnormal shock, and at the same time ensure that
the ultimate consumer, the farmer, benefits from any subsidy scheme.

In order to provide the operational framework for implementing the distribution and
marketing policy under a commercialized arrangement, four studies were commissioned
as follows:
v

1) Commercialization of Fertilizer Marketing and distribution

2) Transportation and Storage Optimization

3) Credit plan for short-term crop production loans and for fertilizer distribution

4) Legal and regulatory framework for fertilizer subsector. .

Two commercialisation studies were conducted; the first by International Fertilizer


Development Centre (IFDC), and the second by Peat Marwick Ani Ogunde Consultants.
Following from the reports of these studies, and in furtherance of the commercialization
concept, the Fertilizer and Agricultural Inputs Marketing Company (FAIMCO) was to
be formed and an inter-ministerial committee comprising the Federal Ministries of
Agriculture, Finance,. National Planning, Industry; and National Stock Exchange, ICON
Ltd. and Peat Marwick Ani Ogunde Consultants, was set up to work out the modalities
for the establishment of the company. A feasibility study was prepared by Peat Marwick
Ani Ogunde Consultants while ICON Ltd. prepared the memorandum for the stock
exchange. An advert was placed to invite applications for the management of FAIMCO
for the first two to three years before full privatization. Four reputable companies,
namely, Total Nigeria Ltd., National Oil Nigeria Ltd., Molaton Consultants and Centre
Point Investment Ltd., submitted proposals. FAIMCO was registered, brokersToFthe
shares were appointed and all other arrangements for the take off of the company was
almost in place when in 1986, the Ministry of Agriculture went to the National Council
of Agriculture (NCA) in Bauchi for'final approval.

However, action to constitute the company into functional entity had to be suspended
consequent upon the decision of the National Council of Agriculture that procurement
and distribution of fertilizers should continue to be the responsibility of the Federal
Ministry of Agriculture, Water Resources and Rural Development through the FPDD.

At the NCA meeting, there were some reservations about the efficiency of such a profit
motivated company as FAIMCO, particularly as its establishment coincided with the
inception of the structural adjustment programme which was designed to promote free
market economy. The inefficiencies of parastatals like National Electric Power Authority
(NEPA) and National.Supply Company (NSC) were cited to buttress the argument against
Following from the above, the challenge was to find ways and means to induct private
sector into all facets of fertilizer programme, viz production, imports and distribution,
without subjecting the system to any abnormal shock, and at the same time ensure that
the ultimate consumer, the farmer, benefits from any subsidy scheme.

In order to provide the operational framework for implementing the distribution and
marketing policy under a commercialized arrangement, four studies were commissioned
as follows:
\

1) Commercialization of Fertilizer Marketing and distribution

2) Transportation and Storage Optimization

3) Credit plan for short-term crop production loans and for fertilizer distribution

4) Legal and regulatory framework for fertilizer subsector.

Two commercialisation studies were conducted; the first by International Fertilizer


Development Centre (IFDC), and the second by Peat Marwick Ani Ogunde Consultants.
Following from the reports of these studies, and in furtherance of the commercialization
concept, the Fertilizer and Agricultural Inputs Marketing Company (FAIMCO) was to
be formed and an inter-ministerial committee comprising the Federal Ministries of
Agriculture, Finance,. National Planning, Industry; and National Stock Exchange, ICON
Ltd. and Peat Marwick Ani Ogunde Consultants, was set up to work out the modalities
for the establishment of the company. A feasibility study was prepared by Peat Marwick
Ani Ogunde Consultants while ICON Ltd. prepared the memorandum for the stock
exchange. An advert was placed to invite applications for the management of FAIMCO
for the first two to three years before full privatization. Four reputable companies,
namely, Total Nigeria Ltd., National Oil Nigeria Ltd., Molaton Consultants and Centre
Point Investment Ltd., submitted proposals. FAIMCO was registered, brokersToFthe
shares were appointed and all other arrangements for the take off of the company was
almost in place when in 1986, the Ministry of Agriculture went to the National Council
of Agriculture (NCA) in Bauchi for'final approval.

However, action to constitute the company into functional entity had to be suspended
consequent upon the decision of the National Council of Agriculture that procurement
and distribution of fertilizers should continue to be the responsibility of the Federal
Ministry of Agriculture, Water Resources and Rural Development through the FPDD.

At the NCA meeting, there were some reservations about the efficiency of such a profit
motivated company as FAIMCO, particularly as its establishment coincided with the
inception of the structural adjustment programme which was designed to promote free
market economy. The inefficiencies of parastatals like National Electric Power Authority
(NEPA) and National Supply Company (NSC) were cited to buttress the argument against

p a g e 2 7
\

FAIMCO. it was also stressed that commercialization and profit motive were generally
incompatible with the administration of subsidy. It was, therefore, concluded that a
completely autonomous and profit motivated marketing company would tend to serve
profitable markets only, and would not, therefore, make fertilizer readily available to all
categories of farmers. This was perhaps the reason for the complete rejection of a
completely autonomous and profit maximization oriented fertilizer marketing company.

It is relevant to note that the above assertions are not necessarily correct in practice.
India moved away from government-run fertilizer marketing system in the mid-sixties to
develop 130,000 private retail outlets by 1985. Yet, fertilizer subsidy was still as high
as 30 percent. Bangladesh also successfully privatized fertilizer wholesaling and retailing
while maintaining over 35 percent subsidy level. In Indonesia, the private sector handled
70 percent of fertilizer sales while the cooperatives handled 30 percent. Yet, fertilizer
subsidies ranged between 20 to 35 percent. In Malaysia, private sector handled 52
percent of fertilizer sales and public sector 48 percent; and yet variable subsidy levels
were being maintained.

Against the foregoing experiences, considerable degree of commercialization could be


accommodated in fertilizer distribution and marketing while still applying subsidy. In
the search for a more efficient and viable fertilizer marketing system for Nigeria, the aim
of commercializing fertilizer marketing should not be the maximization of profit. Rather,
the objective should be to improve efficiency, reduce the staggering wastages and costs
and make fertilizer readily available to farmers. The system should, however, be capable
of generating reasonable profit margins, or at worst cover its costs, as otherwise the
system can be maintained only at the mercy of government subvention.

it was in this context that a two-stage commercialization approach became an attractive


proposition during and immediately after the World Bank fertilizer loan period. The first
stage was the privatization of dealer or retailer operations as was done at the various
ADPs and the input marketing companies in Bida, Kano, Bauchi, Imo, etc. Evidences
abound to show that grassroots penetration of fertilizer distribution was rapidly being
promoted by the appointment of retailers and the establishment of statewide ADPs in
almost all the states of.the federation. The next stage was to be the privatization of a
partially autonomous organization to manage the marketing system while government
maintains some degree of control on issues relating to profit margin, pricing, distribution
policies etc. but this stage was not reached as various other policies since 1986 tended
to further perpetuate public sector involvement in fertilizer distribution.

The second study was to develop fertilizer transportation, storage and inventory
management optimization model to minimise total system cost. This was in recognition
of the fact that storage and transportation costs represented a significant component of
the farmgate cost of fertilizer. Two fertilizer transport and storage optimization models
were developed by IFDC in 1988, and Peat Marwick in 1990, for making optimal
allocation of routes and modes of transport for evacuating fertilizers from each port or

page 28

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plant, through the warehouses, to the various PDPs and retail outlets. The model was
to assist in determining optimum inventory control as well as appropriate shipping
schedules, the berthing ports for vessels, and the distribution of fertilizer from each port
or plant, through all internal supply depots or warehouses, to the final destinations in
such a way that total system cost is minimized. The application of such models is an
indispensable pre-requisite to cost minimization drive in any commercially oriented outfit.

It was, however, not possible to use the transportation model as the basis for fertilizer
distribution during and after the loan period because of the Federal Government’s
subsequent directive to the effect that states and agencies were to lift their consignment
of fertilizer from ports or warehouses. This arrangement was later replaced by the six
depot system whereby all fertilizers from ports and plants were first taken to Funtua,
Gombe, Minna, Lagos, Port Harcourt and Makurdi depots from where states and
Agencies received their allocations.

The third study was designed to examine the types and structure of credit arrangement
that should be put in place to support the privatization programme. Two types of credits
were recommended, viz, production credit to be provided by commercial banks as
"fertilizer credit fund", and the "distribution credit fund" to be provided by commercial
banks, insurance companies and investment institutions, in form of overdraft facilities or
term loans for the construction of stores and related infrastructures, stockholdings and
extension of trade credits.

Other studies which are closely related to fertilizer privatization programme are presented
in appendix II.

6.2 Recent Efforts at Privatization

Consistent with SAP philosophy, and in recognition of the failures of institutional


procurement and distribution arrangements, the 1989 Presidential Budget speech
contained indications of government’s intentions to hand over fertilizer procurement and
distribution to the private sector. Since the move to establish FAIMCO was stalled at
the Bauchi meeting of the National Council for Agriculture in 1986, government has
continued to indicate its intention to disengage from fertilizer operation. With increasing
fertilizer demand in the face of an inefficient fertilizer distribution arrangement, problems
of fertilizer availability, subsidy and pricing continue to mount. This was the situation
which led the National Council for Agriculture to set up a special Committee at its
January, 1990 meeting in Port Harcourt to review the problems of fertilizer distribution
and make recommendations towards averting a fertilizer crisis during 1990 crop year and
beyond'. Sequel to the report of that Committee, two Committees (the "Technical" and
"Policy" committees) were set up at March 1990 Council meeting in Abuja to take
another look at the issue of privatization of fertilizer operation in Nigeria.

page 29

*
The major problem area in the adoption of the privatization concept was perceived, as
at that time, to be the quantification and administration of the subsidy element, as well
as the maintenance of a uniform pricing system, such that subsidy goes to the intended
beneficiaries. A further complication in subsidy administration is the choice of the level
of production/importation or marketing at which to inject subsidy with maximum effect.

The terms of reference for the Technical and Policy Committee were to:

a) examine the concept of commercialization/privatization of fertilizer within the


context of Nigerian fertilizer programme and existing institutional arrangement;

b) identify likely problem areas of privatization/commercialization as they relate to


the procurement, distribution and pricing of fertilizer and suggest possible
solutions;

c) come up with a workable structure or institutional arrangement for private sector


participation in the privatization/commercialization of fertilizer;

d) advise on the economic viability, capital structuring, subsidy component and the
administration, ownership arrangement (share-holding) and management pattern
for privatizing fertilizer operation;

e) advise on the level of Government involvement as regards quality control, price


regulation, including the role of Fertilizer Procurement and Distribution Division
(FPDD) and other fertilizer related agencies such as the National Fertilizer Centre
(NFC)* National Fertilizer Co-ordinating Committee (NFCC), National Fertilizer
Technical Committee (NFTC) etc., in the whole arrangement;

i) examine and itemize the activities required to be carried out by Government to


attract both local and/or foreign investors in the fertilizer programme; and

g) recommend workable alternatives, including the time phasing of the


privatization/commercialization of fertilizer.

In pursuing the assignment, an initial joint meeting of the two Committees mandated the
Technical Committee to prepare a position report for the consideration of and adoption
by both Committees. Consequently, the Technical Committee deliberated extensively on
the terms of reference and resolved to recommend to the joint Technical and Policy
Committees as follows:

a) That most of the issues on the terms of reference, especially items c and d would
require more detailed study at a level that could not be effectively accomplished
within the time and resources available to the committee.

page 30

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b) That the Committee would first appraise the fundamental issues regarding the
choice of realistic and acceptable options of fertilizer privatization for the
consideration of the joint Committee; thereafter a detailed study would be
conducted to address such vital issues as the economic viability, capital
structuring, subsidy components and administration, as well as the ownership
arrangement of the favoured option.

In carrying out its assignment, therefore, the Technical Committee focused more on the
merits and demerits of each fertilizer marketing option, using uniform pricing as well as
effective subsidy administration as indices of choice and acceptability under the Nigerian
situation.

6.3 Summary and Evaluation of Options for Privatization of Fertilizer Operations:

Six options were reviewed and two recommended - options (v) and (vi) - for the
consideration of the National Council for Agriculture. The main features of the various
options are summarized below.

Option I

a) NAFCON to be charged with the responsibility of marketing of imported


fertilizer, in addition to its own products and those of other manufacturers in the
country.

b) The main advantages of this option include the following:

i. NAFCON already has some basic infrastructures and personnel for


fertilizer marketing;

ii. has the ability to raise the required foreign exchange for the importation
of any shortfall to meet national demand.

c) The option may, however, suffer from the following disadvantages:

i. adverse effect on the company’s more important task of production;

ii. undesirable intervention by Government which has a majority share in the


company;

iii. inadequate attention to the marketing of fertilizer produced by other local


manufacturers;

iv. preference for importation at the expense of local production; and

page 31

A
v. the involvement may eventually prove unwieldy, monolistic, tricky and
< costly.

Option II

a) The option allows for each local fertilizer producer to market its own products
while an appropriate independent organization is selected to import and market
any shortfall that may be required nationally.

b) . ... The main advantages are:

i. the introduction of an element of competition and efficiency; and

ii. a compulsion to organise effective marketing strategies.

c) possible disadvantages include:

i. difficulty in the effective planning of yearly production/importation due


to variations in fertilizer quantities and types;

ii. diminishing viability of the marketing organization with time as local


production increases and, therefore, the volume of imports decreases;

iii. excessive imports or severe shortages of local products in-any one years
due to'lack of proper coordination between local producers and the
company charged with importation;

iv. difficulty in marketing' locally produced fertilizers due to preference for


imported products; and

v. sub-optimal distribution operations, especially since none of the companies


would be able to employ an approach that would minimise total
distribution cost.

Option III

a) Each local producer would be allowed to market its products and, in addition, any
number of registered private and public organizations would be free to import and
distribute fertilizer.

b) The major advantage of this option is the relief it would bring to Government
from the burden of direct funding of fertilizer procurement and distribution.

p a g e 3 2
c) Among likely problems/disadvantages are the following:

i. maximization of profits may be the only motive of the organization;

ii. bunching of ships may result due to difficulty in coordinating their arrivals
at the ports;

iii the management of the system under this option might become difficult
and unwieldy; and

iv. complication in the administration of subsidy where this remains a major


issue.

Option IV

a) The option provides for the restructuring of FPDD into a semi-autonomous


parastatal to continue with the procurement and distribution of fertilizer, both
from imports and local plants.

b) Advantages of this option include:

i. familiarity with the importation and handling of fertilizer;

ii. fewer additional staff needed relative to a new set up;

iii conversant with Government policies; and

iv. in a position to exercise greater authority over state ministries of


agriculture, ADPs, as well as other public agricultural
proj ects/organizations.

c) The disadvantages/problems envisaged include the following:

i. strong Government involvement and intervention may create bottlenecks


and result in inefficiencies of marketing and distribution;

ii. funding problems and financial losses as well as adverse effects on local
manufacturers; and

iii even though a commercial system, the option carries inherent lapses which
, can only be improved upon within a wholly privatized marketing system.
i
4

O ption V

a) The option recommends the establishment of two, but not more than three,
independent national marketing organizations to procure all locally produced
fertilizer, import the necessary shortfall and to market same. The main features
of the companies would include the appointment of their own wholesalers and
retailers; use of existing infrastructures; ascertaining annual national fertilizer
needs; and promoting fertilizer use and development through research and
extension. The marketing margin would be granted by Government to
accommodate margins for wholesalers and retailers, but each organization would
be free to earn greater profit by increasing capacity utilization, volume of sales,
as well as improving on the efficiency of distribution marketing.

b) Advantages of the arrangement under option V include the following:

i. the creation of two or more marketing organizations would break the


monopoly of a single outfit as well as encourage competition;
1
| ii. national-level marketing organizations would enhance the implementation
i

i of national policies on fertilizer;

iii operations would be devoid of bureaucratic delays associated with


Government-controlled operations;

iv. exclusive attention would be given to marketing, distribution as well as


promotional and fertilizer use development activities;

v. freedom from problems of industrial relations as characterized in


production plants; and

vi. greater professionalism in fertilizer operations.

vii subsidy will be administered directly to the marketing organization; the


subsidy will be easier to administer and will have a greater chance to
reach the intended beneficiary, the farmer.

c) The operational problems/disadvantages envisaged include:

i. the organizations might end up like reformed parastatals, especially if the


Board of Directors and the share holding arrangement are not properly
handled;

page 34

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f,
kr.

ii. delayed payment, blame-shifting and possible stalemate resulting in the


non-lifting of products from plants;
&
1

l-i
t
iii little or no incentive for manufacturers to improve on the quality of their II
products; i il t-
IT
! ; iv. the fortunes of the manufacturers might be unfairly tied to the
performance of the marketing organizations;

v. many bulk blending plants would emerge since the market would be
virtually guaranteed; and

vi. bulk blending plants may have serious problems in disposing of any excess
fertilizers,, since their products are not exportable.

Option VI

a) Each fertilizer producer would be allowed to open up marketing channels to


market its products, while any shortfall would be imported by an independent
private or public organization and released to any of the local manufacturing
companies to market

b) Advantages include:

i. relief to Government from the burden of providing seed capital for any
marketing organization; and

ii. enhanced competition among producers, especially since each I i


manufacturer would have its destiny in hand.
n-
! aa
c) The main disadvantages of the option relate to the following:

i. bulk blenders would necessarily depend on NAFCON for raw materials; H


;i
ii. decisions about who should import the shortfall and/or market same; and

iii. potential danger of scarcity and price escalation, especially if, in anyone-
year, the plants are not able to operate at expected production capacities.

page 35
C rite ria fo r Preferred Q ptionfsl

Any preferred option(s) must be able to achieve much of the following broad objectives:

a. establish multi-channel approach to marketing in order to ' ensure fertilizer


availability at the right place, time and cost, as well as the correct type and
quality;

b. introduce competition both at the wholesale and retail levels for effective and
deep market penetration; and

c. guarantee uniform pricing and cost-effective subsidy administration.

All things considered, the balance of advantage seems to be in favour of option V, with
option VI as a close second.

If option V is adopted, there is a need for a detailed study designed to, among others,
define an operational structure or institutional arrangement for the privatization
programme. The study should assess the economic viability, capital structuring, subsidy
administration, share holding and management arrangement for the option.

Specifically, in proposing to set up independent, self-supporting fertilizer marketing


companies for effectuating the privatization programme as in option V the following
questions arise:

1) What are the potential contributions of a commercial marketing companies to


increased fertilizer uptake?

2) Will the fertilizer marketing company be economically viable if it does not market
both locally produced and imported fertilizers, as well as other complementary
inputs?

3) What are the most appropriate organizational structure-and—management


techniques consistent with the ownership pattern, and how should the structure be
modified to reflect anticipated growth in the activities of the company?

4) What will be the capital structure, operating costs and funding plan of the
company? ■

5) What is the potential level of profit or financial returns of the company?


‘ \

6) What will be the operation and control strategies of the company?

p a g e 3 6
7) How will the subsidy level be determined and at what point will it be injected for
maximum effect?

8) Considering the Nigerian economic and political environment, what will be the
appropriate strategy of implementation and the phasing of the transition into a
privatized fertilizer marketing system?

9) And last, but by no means the least, what will be the nature and form of
institutional control and support required for a privatized fertilizer marketing
system?

These and other questions need to be addressed in order to provide crucial information
that will guide prospective investors in their decision making process for or against
equity participation in the new company.

If, however, option VI is adopted, studies of normative costs of production and


marketing costs and margins of individual plants are pre-requisites to the quantification
and administration of subsidy.

Given the changes which have taken place since the committee-submitted^Tts
recommendations, there may be a need to revisit the above and other possible
privatization options with a view to further appraising their applicability to the present
and future Nigerian situation and making appropriate choice of options. Changes which
necessitate such reappraisal include: '

i. the expansion of indigenous production base through increased capacity utilization


of existing plants and the establishment of NAFCON phase II and three additional
blending plants, namely, Agro-Nutrient and Kasco, both in Kano; and Yerwa
fertilizer in Maiduguri, a development that will progressively reduce the quantity
of fertilizer imports overtime.

n. anticipated policy modifications on fertilizer policy issue.


c*
%%

A p p e n d i x 1: FcrllIlzcr Allocation to States, 1991 - 1 9 9 A (MT)

STATES 1991 1992 1 993* 1 99 A

ADIA 16,009.00 30 , A50.00 27,711.00 32,680.00


k
ABUJA 12,000.00 13,720.00 15,810.00 1 7 , 1 6 0 . OU

ADAMAWA 32,750.00 A J ,280.00 A 7 , A (Jo. 0 0 AO, 3 5 9 . 0 0


S-7

AKWA-IBOM 7,000.00 7,920.00 19,287.00 2 A ,188.00 -


I
ANAMORA 18,000.00 23,210.00 21 , 0 3 3 . 0 0 25,917.00

BAUCHI 78,000.00 {12,320.00 83,900.00 90,573.00

BENUE 65,000.00 60,060.00 61 , 5 5 0 . 0 0 66,710.00 ■fc:

■;fc:
DORNO 38,000.00 50,500.00 53,310.00 65,700.00

C R O S S RIV E R 17,520.00 2 3,3 A 0.0 0 21 ,A 2 0 . 0 0 29,068.00

DELTA 10,000.00 16,A70.00 21 , 6 0 0 . 0 0 25,730.00

EDO 10,000.00 12,060.00 18,756.00 21 ,9 A 0 . 0 0

ENUGU 18,000.00 31 , 6 5 0 . 0 0 35,991.00 38,093.00

IMO 16,000.00 2 3,5 A 0.0 0 30,519.00 35,557.00

JIGAWA 38,250.00 63,300.00 63,300.00 68,100.00'

KADUNA 72,200.00 82,620.00 82,920.00 91 , 3 3 0 . 0 U ,

KAMO 38,250.00 63,330.00 * 63,330.00 72,230.00

KATSINA 69,500.00 83,330.00 8 3 , 3 A0.00 85,1 A O . 00

KEBBI 33,500.00 61,000.00 6 A ,5 1 0 . 0 0 67,510.00

KOGI 1 A, 5 0 0 . 0 0 39,710.00 A O , 180.00 AO,920.00

KHARA 1A ,500.00 32.A00.00 32,700.00 3 A ,A 3 0 . 0 0

LAGOS 16,000.00 17,500.00 1 5, 7 A 1 .00 1A ,167.00

NIGER 60,000.00 '80,810.00 81,110.00 0 1 ,9 0 0 . 0 0

j i~
\

A
u
'p -y)
9

OGUN 1A ,700.00 2 0 , O A O .00 10,756.00 10,620.00

ONDO 21,000.00 31 , 0 0 0 . 0 0 29,367.00 25,630.00

OSUN 22,000.00 31,000.00 29.170.00 2 A ,3 0 U . 00

OYO 22,000.00 25,320.00 26,600.00 27,600.00

PLATEAU 71,000.00 65,A90.00 67,260.00 70,000.00

RIVERS 25,000.00 3 A ,300.00 29,565.00 30,350.00

t.
SOKOTO 33,500.00 79,170.00 79,870.00 03,670.00

TARADA 32,750.00 30,300.00 30,020.00 A A ,5A 0 . 0 0

YOBE 30,000.00 5 0 , A 9 0 . 00 5 0 , A 7 0.00 52,870.00

DUFFER
STOCK 25.000.00 89,970.00 35.A36.00 193,330

TOTAL . 1 ,000,000.00 1,A 1 0 , 0 0 0 . 0 0 1 ,390,000.00 1,650,000.00

1 Allocation of additional ?U 0 t00ffT from Local Contractor.*) not Included.


Source:- Composed from FFUU Reports.

i
i:,
$
■V.,.

j:2'-;.
I%

i if
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i &
i
I
i j
Appendix 2: Studies Relating to Fertilizer Privatization

Some of the previous studies which are either tangentially or closely related to fertilizer
privatization issue are listed below.

1) Ogunfowora O. (Team Leader) (1983): "Nigeria Fertilizer Import Loan I


Project: A study conductor by the Fertilizer Project I Mission for FPDD, Federal
Ministry of Agric, Water Resources and Rural Development, Lagos.

2) Ogunfowora O. (Team Leader). (1985): "Nigerian Fertilizer Import Loan II Project".


A study conducted by the Fertilizer Project II Mission for FPDD, Federal Ministry of
Agriculture, Water Resources and Rural Development, Lagos.

3) Agricultural Projects Monitoring and Evaluation Unit. (1988): "Project Completion


Report of Nigerian Fertilizer Import Loan 2345UNI, Main Report" prepared for FPDD,
FMAWR & RD, Lagos, July. '

4) KPMG Peat Marwick- Ani Ogunde Consultants. (1988): "The Development of Effective
Fertilizer Pricing Policies for Nigeria". A report prepared for FPDD, Federal Ministry
of Agriculture, Water Resources and Rural Development,
(FMAWR & RD) Lagos.

5) _____________________ 1990. "Study on the Determination of Normative Costs of


Inter and Intra State Fertilizer Distribution in Nigeria". A report prepared for FPDD,
FMAWR & RD, Lagos, February.

6) National Council for Agriculture. (1992): "Memorandum by Honourable Minister for


Agriculture on Fertilizer Distribution in 1991 2nd 1992". A special session held in
Abuja, 9th March, NCA 92 (s) 1.

7) O. Ogunfowora (1985): "National Agricultural Policies and Their Effect on Fertilizer


Use in Nigeria". A Paper Prepared for the Caribbean Workshop on Fertilizer
Technology and Marketing Systems, November 11-15, 1985, IFDC, Muscle Shoals,
Alabama.

8) --------------- (1989): "Prospects and Contribution of Fertilizer Companies to National


Agricultural Growth". Paper presented at the National Workshop on Fertilizer Uses,
Distribution and Marketing in Improving the Productivity of Farmers, Port Harcourt,
12th - 14th April.

9) ______________________ (1989): "Fertilizer Outlook in Nigeria'*. Paper Presented at


the National Workshop on Fertilizer, Durbar Hotel, Kaduna, 5th - 7th June.

page 40

•A
Ir
10) _______________________(1990): "Fertilizer Sub-sector in Nigeria. A Blue-Print for £
Improved Performance in the 90’s". Paper presented at the 2nd National Fertilizer
Workshop, organized by National Fertilizer Company of Nigeria, N1CON-NOGA Hotel,
Abuja 5th - 7th November.

11. ----------------- (1986): The Application of Mathematical Programming Models to


Fertilizer Distribution Planning in the Developing Countries. Monograph prepared at Sir
IFDC Muscle, Shoals, Florence, Alabama. £6

12) The Development of Effective Fertilizer Pricing Policies for Nigeria, prepared by Peat
Marwick Ani Ogunde Consultants Lagos, for FPDD, Federal Ministry of Agriculture,
Water Resources and Rural Development Lagos, Nigeria, July 1988.
I
13) A Commercial Fertilizer Marketing System for Nigeria. A report prepared by IFDC for
FPDD, March, 1985.
R
14) Peat Marwick (1993) - A study on Impact of Nigerian Fertilizer Policy on Border Trade
with Niger. A Study Commissioned by IFDC Africa Lome, Togo.

15) Peat Marwick (1986): Fertilizer and Agricultural Inputs Marketing Company Ltd
(FAIMC.O) - Feasibility Study for Prospectors. Report prepared for FPDD.

16) N. Vachhrajani (1990): Fertilizer Subsidy Management Scheme for Nigeria.

17) Kundhavi Kadiresan (1989): A study on Institutional Arrangements for Managing


Fertilizer Subsidies in Developing Countries.
L
&
18) G B Ayoola (1990): Command Areas in the Privatization of fertilizer marketing -in-
Nigeria: A preliminary assessment.
&■
19) FACU (1993): Alternative Pricing and Distribution Systems for Fertilizer in Nigeria.
n
20) R. Kansagra (1991): Fertilizer Marketing in a fully privatized economy - A
proposal for fertilizer privatisation.

21) A. H. M. Obaidul Bari: Privatization of Bangladesh Fertilizer Marketing and


Distribution - A case Study Paper.

22) Privatization of Fertilizer Operations - Report of NCA Committee on Privatization of


Fertilizer Procurement and Distribution Presented at Makurdi July,* 1990.

23) S. G. Wedderburn (1988): Key issues in Formulating Fertilizer Price Policy: An


evaluation ot Multiple Impact of Alternative Price levels Report prepared for APMEU.

page 41

*8 >