Inorganic fertilizer use across Sub-Saharan Africa is generally
considered to be low. Yet, this belief is predicated
on the assumption that it is profitable to use rates higher
than currently observed. However, there is little rigorous
empirical evidence to support this notion. Using a nationally
representative panel data set, and with due recognition
of the role of risk and uncertainty, this paper empirically
estimates the profitability of fertilizer use for maize production
in Nigeria. The analysis finds that inorganic fertilizer
use in Nigeria is not as low as conventional wisdom suggests.
Low marginal physical product and high transportation
costs significantly reduce the profitability of fertilizer use.
The paper finds evidence that strategies to reduce transportation
costs are likely to have a much larger effect on the
profitability of fertilizer use than fertilizer subsidies. Apart
from reduced transportation costs, other constraints such
as timely access to the product; availability of complementary
inputs such as improved seeds, irrigation, and credit;
as well as good management practices are also necessary
for sustained agricultural productivity improvements