Dar es Salaam. Fertilizer subsidies remain one of Tanzania's most important policy tools for boosting food production and protecting food security, but a new study warns that subsidies alone cannot sustainably transform agriculture.
The Study titled: 'Effect of Fertilizer Subsidy Expenditure on Agricultural Growth in Tanzania, 1995-2024', published by the University of Dodoma in (UDOM), insists that unless subsidies are backed by investments in irrigation, improved seeds, research and efficient distribution systems the policy would not serve to expectations.
The study, conducted by economists Noah Sikwese, Lutengano Mwinuka and Joel Mmasa of UDOM and Rungwe District Council, examined nearly three decades of government expenditure on fertilizer subsidies between 1995 and 2024 to assess how public spending has influenced agricultural growth.
Researchers conclude that while fertilizer subsidies deliver significant short-term gains by increasing agricultural output, their long-term impact becomes less effective if governments fail to invest simultaneously in other productivity-enhancing interventions.
"The results indicate that... fertilizer subsidy expenditure has significant positive effects on agricultural growth in the short run," the researchers note.
However, they caution that "in the long run" increased subsidy spending alone can reduce agricultural growth because of inefficiencies, poor allocation of resources and the crowding out of investments in irrigation and agricultural research.
The findings come at a time when Tanzania is placing agriculture at the centre of its food security agenda while striving to cushion farmers against rising fertiliser prices and climate-related production shocks.
Agriculture remains the backbone of Tanzania's economy, contributing 26.2 percent of the country's Gross Domestic Product (GDP), supplying about 65 percent of industrial raw materials and employing approximately 65.6 percent of the labour force.
The sector also remains central to national food reserves, which reached about 114 percent in 2022.
The researchers argue that increasing productivity through affordable farm inputs is therefore not simply an agricultural issue but an economic necessity.
According to the study, Tanzania has consistently promoted fertilizer use alongside improved seeds and soil testing to enhance crop production.
Government subsidy programmes, implemented in partnership with private-sector actors, were designed to encourage more farmers to participate in both food and cash crop production while improving national food security.
The paper provides an important historical perspective.
It notes that the National Agricultural Input Voucher Scheme (NAIVS), introduced in 2009, sought to increase crop production, improve food security and expand agricultural exports.
More recently, the government integrated fertilizer subsidies with the bulk procurement system while involving cooperatives, agro-dealers and local government authorities to improve distribution, especially in remote rural areas.
Researchers also point to Tanzania's relatively low fertilizer usage compared to other countries.
On average, Tanzanian farmers apply only about 10 kilogrammes of fertilizer per hectare, compared with 27 kilogrammes in Malawi and as much as 279 kilogrammes in China, highlighting the country's significant room for productivity improvement.
The study's statistical analysis paints a nuanced picture.
While short-run estimates show fertilizer subsidies positively influence agricultural growth, long-run modelling found that every percentage increase in fertilizer subsidy expenditure was associated with a 4.25 percentage-point reduction in agricultural growth when implemented without complementary investments.
By contrast, irrigation spending showed a strong positive contribution to growth, while recurrent agricultural expenditure also recorded positive effects.
Rather than calling for subsidy programmes to be reduced, the researchers recommend making them smarter.
They argue that financing fertilizer subsidies should be integrated with investments in agricultural technology, improved seed varieties, research and development, irrigation infrastructure and stronger extension services.
"Fertilizer subsidy expenditure should be correlated with advancements in agricultural technology, improvements in seeds, coordination of agro-dealers on timely distribution of fertilizer and the strengthening of research and development," the study recommends.
Evidence presented in the paper suggests subsidy programmes have already produced tangible benefits.
Government records cited in the study show that Tanzania distributed nearly 348,000 tonnes of subsidised fertilizer worth approximately Sh348.7 billion to about 790,922 farmers, helping improve agricultural productivity, food availability and food security.
The research also highlights the growing importance of public-private partnerships in agricultural transformation.
Microfinance institutions, commercial banks, agro-dealers and Savings and Credit Cooperative Societies (SACCOS) are increasingly helping farmers obtain agricultural inputs through financing and credit facilities.
Meanwhile, efficient fertilizer distribution has been supported by hundreds of agro-dealers operating across the country, improving access even in rural communities.
In its conclusion, the study argues that the future of Tanzania's food production depends not on fertilizer subsidies alone but on building an integrated agricultural ecosystem.
Researchers recommend closer collaboration between government and the private sector to ensure efficient implementation of subsidy programmes while simultaneously expanding irrigation, strengthening agricultural research and accelerating technology adoption.
Register to begin your journey to our premium contentSubscribe for full access to premium content
