Returns to fertilizer use: does it pay enough? Some new evidence from Sub-Saharan Africa
This paper explores the importance of fertilizer profitability in explaining the relative, apparent low use of chemical fertilizers by African farmers. Using large-scale data on maize plots from Burkina Faso, we estimate maize yield response to nitrogen to be 17 kg/ha on average and to vary with soil characteristics.
Profitability, which we measure through the calculation of a marginal value cost ratio, is estimated at 1.25 on those plots which received fertilizers, with significant variations across regions.
For those plots on which fertilizers were not applied, we predict that fertilizers should be profitable in most cases under the current level of subsidized fertilizers prices. Our findings call for the continuation of fertilizers subsidization along with policies that guarantee adequate supply of fertilizers to farmers in need, promote soil conservation techniques, and facilitate farmers' access to credit.
Our results also show that not taking into account the endogeneity of nitrogen use in the yield equation may produce biased estimates of maize yield response to nitrogen.