Grain Market Research Project
Grain Market Research Project PROMOTING FERTILIZER USE IN ETHIOPIA: THE IMPLICATIONS OF IMPROVING GRAIN MARKET PERFORMANCE, INPUT MARKET EFFICIENCY, AND FARM MANAGEMENT Mulat Demeke Ali Said T.S. Jayne WORKING PAPER 5 GRAIN MARKET RESEARCH PROJECT MINISTRY OF ECONOMIC DEVELOPMENT AND COOPERATION ADDIS ABABA MARCH 1997 PROMOTING FERTILIZER USE IN ETHIOPIA: THE IMPLICATIONS OF IMPROVING GRAIN MARKET PERFORMANCE, INPUT MARKET EFFICIENCY, AND FARM MANAGEMENT MULAT DEMEKE ALI SAID T.S. JAYNE MARCH 1997 This is a revised and expanded version of a paper presented at the Grain Market Research Project Discussion Forum, November 8-9, 1996, Sodere, Ethiopia, sponsored by the Ministry of Economic Development and Cooperation, Government of Ethiopia. Mulat Demeke is Lecturer, Addis Ababa University, Ali Said is Research Scholar, Ministry of Economic Development and Cooperation; and T.S. Jayne is Visiting Associate Professor, Michigan State University. The authors thank Aklu Girgre, Daniel Molla, Asres Workneh, Steven Franzel, Valerie Kelly, and Jim Shaffer for comments on a previous draft. TABLE OF CONTENTS 1. BACKGROUND ...................................................... 1 2. THE PROFITABILITY OF FERTILIZER USE .............................. 7 2.1. Factors Influencing Fertilizer Use .................................. 7 2.2. Measuring the Profitability of Fertilizer .............................. 7 (a) The value-cost ratio (VCR)................................ 8 (b) The reservation price of fertilizer........................... 10 3. THE EFFECTS OF IMPROVING FERTILIZER MARKET .................... 14 3.1. Implications for Fertilizer Prices .................................. 14 3.2. The Impact on Fertilizer Profitability ............................... 21 4. THE IMPLICATIONS OF IMPROVING THE OUTPUT MARKET.............. 23 5. IMPROVING THE YIELD RESPONSE TO FERTILIZERS.................... 26 5.1. Constraints to Improved Yield Response ............................ 26 5.2. The Implications of Improving Output Response ...................... 31 5.3.
[Show full text]