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Spatially-Explicit Farmgate Price Data in Africa: Why We Should Care and What to Do About It

Posted on Blogs, December 8, 2017

The use of inorganic fertilizer and other purchased inputs remains very low amongst African smallholder farmers. A central hypothesis about why this is the case, is that fertilizer use is simply not profitable, given the effective price of fertilizer at the farm gate, as well as the farm gate price of farm outputs (e.g. maize grain).

In a very stylized way, input-output price ratios are known to increase as one moves further away from markets (Figure below). Input prices increase with distance as they incorporate the price of movement from the port or blending facilities to farm locations. Output prices, in contrast, decrease as one moves away from market centers, reflecting the costs of transport and intermediation by traders. Even if fertilizer use is profitable in areas with relatively good access to markets, as one moves further from market centers this profitability can be expected to decrease and beyond some threshold of remoteness it no longer makes economic sense to participate in input and output markets.