The Deregulation of Fertilizer Prices: Impacts and Policy Implication

The Deregulation of Fertilizer Prices: Impacts and Policy Implication

Assesses how the recent deregulation of fertilizer prices will affect the profitability of fertilizer use on various crops throughout Ethiopia. The note also identifies other policy measures that can increase the cost-effective use of fertilizer to promote productivity growth throughout the food system. Results are based mainly on the derivation of value-cost ratios (VCRs) for the use of DAP fertilizer on selected crops in 51 cereal production areas of Ethiopia. The VCR is an indicator of profitability of fertilizer use (measuring the value of additional crop ouput relative to the cost of a given application of fertilizer). The factors that affect the VCR are the agronomic response of crop yields to the application of fertilizer, the cost of fertilizer to the farmer, and the price of the crop to which fertilizer is applied. [author]

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