Fertilizer market value chain analysis and investment opportunity framing for increased usage by smallholders

fertilizer
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Situation

Agriculture productivity in Uganda is held back by low usage of fertilizers and other productivity-enhancing technologies, especially on small- and medium-scale farms. While large-scale farms purchase fertilizers at competitive prices directly from suppliers, supply to small- and medium-scale farms is highly inefficient. This is partly due to low demand by this market segment, resulting in high prices. In addition, the fertilizer industry suffers from arbitrary policy and regulatory constraints that limit its operations and growth.

The FCDO funded Northern Uganda-Transforming the Economy through Climate-Smart Agribusiness Market Development (NUTEC-MD) program sought expertise to size fertilizer demand by farmer typologies, carry out a market analysis to understand industry dynamics and value chain actors better, and make actionable recommendations for addressing the low usage of fertilizers.

Industries
Strategy, Data & Insights
Market Analysis & Opportunity Scoping
Smallholder Agriculture Development
Public Policy
Program Design & Business Development
Agribusiness & Food Systems
Climate Action
Economic Growth & Trade
Engagement

The client contracted ORI to conduct a detailed analysis of the Uganda fertilizer market, size demand, and frame opportunities to increase fertilizer use by smallholder farmers.

ORI delivered this engagement by:

  • Developing a detailed research and data analysis methodology to provide a nuanced understanding of the current demand in the Uganda fertilizer market.
  • Collecting secondary data on policy and regulation, and primary data on fertilizer purchases from major consumers in Uganda, including northern Uganda.
  • Carrying out interviews and conducting data research on costs and margins of value chain participants, including smallholders, large/commercial farms, regional and national importers, distributors, agro-dealers, and transporters.
  • Conducting a comprehensive industry analysis, drawing insights from primary data and interviews with value chain participants, clearly showing the Uganda fertilizer market's current and future potential.
  • Determining demand growth drivers and assessing the growth potential of the fertilizer industry by target crops and farmer type.
  • Analyzing the Uganda fertilizer value chain and identifying key constraints—including political economy and policy factors that have inhibited the growth of the fertilizer market.
  • Modeling farmer incomes for four major crops—maize, rice, sorghum, and sunflower—across various input assumptions.
  • Building investment hypotheses and prioritizing the highest potential opportunities.
Outcomes
  • Sized the Uganda fertilizer market by farm type and projected demand growth by fertilizer formulation.
  • Identified specific policy and regulatory constraints, such as import tariffs and licensing requirements, that hinder the increased use of fertilizers and provided actionable recommendations and solutions to overcome them.
  • Analyzed, prioritized, and framed investment opportunities to increase farmers’ access to affordable, quality fertilizer, specifically for northern Uganda.
  • Identified and screened businesses that the NUTEC-MD program could engage to increase fertilizer demand/usage by smallholders in northern Uganda.
  • Uncovered opportunities for private sector investment, resulting in the deployment of over £37 million into northern Uganda across various interventions, including the fertilizer value chain.
  • The findings of this market analysis were presented to industry stakeholders and publicized widely in the national press, for example, https://www.monitor.co.ug/uganda/magazines/farming/should-you-rethink-your-fertiliser-management-practices--1783684; https://agriprofocus.com/post/5bc850cb26b72a71f45d4c72