Africa aid effort targets fertiliser supply costs

Reducing costs of fertiliser and seed to small farmers in Africa by making supply channels more efficient could boost African food output and help alleviate the world food crisis, experts and officials said on Friday.

The role of the fertiliser industry, which has reaped fat profits while food prices have soared, was highlighted at an Oslo conference of the African Green Revolution movement, whose chairman is former U.N. Secretary-General Kofi Annan.

"The potential for a big breakthrough in African food production, and through that a reduction not only of hunger but also of poverty, is vividly before us," American economist Jeffrey Sachs, a special advisor to U.N. Secretary-General Ban Ki-Moon, told Reuters at the conference.

But funds to support poor farmers by getting fertilisers and high-yield seeds to them is lacking, despite pledges by donors who last year agreed to create a global fund for African agriculture at the World Bank.

"The actual funding to get this programme under way has not come through," Sachs said.

About $8 billion per year is needed for African agriculture, according to a U.N. Secretary-General steering group, but only about an eighth of that has come through, he said.

National programmes like that of Malawi are showing practical ways to address the crisis to "double, triple or even quintuple" productivity of African farms by helping poor farmers get the technology and inputs they need, Sachs said.

Malawi used fertiliser vouchers on a national scale and went from a chronic food deficit to an exporter of maize to its poor neighbours within just two years. It provided subsidies against the recommendations of its donors, an official said.

Norway announced at the Oslo conference that it would partner with Norwegian fertiliser producer Yara International (YAR.OL: Quote, Profile, Research, Stock Buzz) in a bid to boost African agriculture by, among other things, improving the availability of fertilisers.

Other fertiliser producers were expected to join a broader public-private agreement to be announced at the United Nations later, officials at the conference said.

Yara said it would invest in port facilities in Tanzania and Mozambique, to improve supply, which a Yara official said could reduce transport and warehousing costs "to the farm gate," which currently make up roughly 20 percent to 30 percent of total cost.

"It's one of the areas you can significantly influence because at the end of the day you cannot terribly much influence the raw commodity price," said Sean de Cleene, Yara's head of new business development in Africa.

"We make our margin on the original product, so the more you can reduce those logistics costs the more you can reduce the final price that the small holder farmer pays," he said.