Chapter 53 Fertilizers and other farm chemicals

https://doi.org/10.1016/S1574-0072(06)03053-2Get rights and content

Abstract

Demand for fertilizer in developing countries has expanded at a rapid rate over the past forty years. The relative scarcity of agricultural land has been a major underlying cause of this expansion in demand. More proximate causes include the development of complementary Green Revolution technologies – high yielding, fertilizer responsive seed varieties and expansion of irrigation or better water control within irrigated systems. At the same time, real fertilizer prices have declined over time, driven by technical change in fertilizer production. Expansion of fertilizer consumption has been particularly high in many Asian countries, and particularly low in much of Sub-Saharan Africa, where infrastructural and institutional constraints have restricted use.

Pesticide use has also expanded in developing countries, albeit in more localized circumstances. Relative scarcity of agricultural labor has been one cause of increased herbicide demand. Disease pressure and the availability of disease-resistant cultivars have influenced insecticide and fungicide demand. Integrated pest management (IPM), over the past 20 years, and genetically modified crops, over the past five to ten years, are new technologies that have the potential to curb the growth in pesticide use.

Price policies, environmental policies, and related investments in agricultural research and development, infrastructural expansion, or education all influence the markets for fertilizer and other farm chemicals in developing countries. One major policy issue is how to reduce or eliminate fertilizer subsidies at the same time that measures are taken to increase demand in areas such as Sub-Saharan Africa where fertilizer use is below the social optimum. At the same time, in intensive agricultural systems where agricultural chemical use is high, resource degradation and human health risks from pesticide use compromise productivity growth. In areas of both high and low use of chemical inputs, meeting the production and environmental challenges of the future will require increasing reliance on knowledge-intensive technology.

Introduction

In 1961, developing countries consumed only 12% of the world total consumption of manufactured fertilizer nutrients.1 Industrialized countries used over 70% of the world total, with the countries now sometimes referred to as the transitional economies of Eastern Europe and the former Soviet Union making up the balance. The United States was the world's largest single country user, accounting for about a quarter of all nutrient consumption. Application rates (kg of nitrogen, phosphorus, and potassium nutrients per crop hectare) were over ten times as high in industrialized countries as in developing countries.

By 1977, total fertilizer nutrient consumption in developing countries overtook consumption in the current transitional economies, and by 1984, it surpassed consumption in industrialized countries for the first time. About the same time, China overtook the United States to become the world's leading consumer of fertilizer nutrients. By 2001, developing countries consumed 64% of total nutrients and industrialized countries 31%. Consumption in transitional economies, which had reached a peak share of 27% in the mid-1980s, had collapsed after 1990 and only constituted a little more than 5% of the total. China alone accounted for about a quarter of all nutrient consumption, and India for about one-eighth. India stood just behind the U.S., with its 14% share, as the third largest user of fertilizer. Application rates in industrialized countries were still higher than in developing countries, but only by about 20 to 25% on average.

In contrast to data on fertilizers, data on pesticide use (in particular herbicides, insecticides, and fungicides) over time by region and country are limited, especially for pesticide usage prior to 1990. Some data do exist, however, and it is clear that pesticide use has grown over time in developing countries as a proportion of total use [FAOSTAT (2004)]. As of the mid-1990s, developing countries consumed approximately 25% of all pesticides, 85% of it for agricultural purposes [World Resources Institute (1999)].

This chapter surveys the current state and historical development of markets for fertilizers and pesticides in developing countries. The chapter begins with a discussion of fertilizer consumption by region and by crop, as well as a brief summary of pesticide consumption. The next section reviews determinants of consumption on both the demand and supply sides. Very broadly, fertilizers can be seen as substitutes for land, and all other things equal, one would expect high fertilizer consumption to develop in land-short, labor-abundant agricultural economies. In contrast, herbicides can be seen as substitutes for labor-intensive hand weeding, and thus they might be most widely used in land-abundant, labor-short agriculture. Broad input substitution effects appear less determinative for consumption of insecticides and fungicides; instead, one major cause for widespread use of these latter two pesticides may be whether strong host-plant resistance to the relevant pests is widely available in cultivars planted by farmers. However, other interacting factors also influence the use of farm chemicals, and the determinants of consumption may shift over time. Factor substitution and other causes for farm chemical use will be analyzed in greater detail below.

Following the discussion of farm chemical consumption, the next substantive section considers two issues in market development. Price and regulatory policy, in particular subsidies for chemical inputs such as fertilizer, have been widely debated in the literature, and these debates will be summarized. Environmental issues in the use of fertilizers and pesticides have been prominently recognized for agriculture in developed countries. The nature of negative externalities from chemical use in developing countries, as well as possible policy responses, will also be addressed. The chapter concludes with a brief summary.

Section snippets

Fertilizer consumption by region

As noted, the growth of fertilizer consumption in developing countries has been extremely rapid. This subsection summarizes trends in developing country fertilizer use. The following section, on the determinants of fertilizer use, will outline some of the reasons for the observed trends and reasons for differences between those trends in different parts of the world.

Table 1 presents summary data for 1999–2001. The two most populous countries in the world, China and India, account for a

Determinants of consumption

This section discusses economic and other factors that can affect the consumption of fertilizer and other farm chemicals. The majority of the discussion will focus on fertilizer, but some of the factors that specifically influence the use of pesticides will be considered in the ultimate sub-section.

Issues in market development

Policy discussions concerning the use of fertilizer and other farm chemicals in developing countries usually coalesce around one of two broad sets of issues. The literature relating to price and regulatory policy tends to apply particularly to fertilizer. Environmental issues, on the other hand, tend to be particularly important in pesticide use, although fertilizer use also has environmental dimensions.

Summary

The market for fertilizer in developing countries, measured by nutrient consumption, has expanded at a striking rate over the past 40 years. Fertilizer use has been stimulated in particular both by demand side factors such as the introduction of fertilizer responsive HYVs, and by supply side factors such as the reduction in fertilizer price as the result of technological advance in fertilizer production. The expansion in fertilizer consumption has been uneven, however, as it has been

References (116)

  • S.W. Omamo et al.

    Fertilizer trade under market liberalization: Preliminary evidence from Kenya

    Food Policy

    (2001)
  • F. Place et al.

    Prospects for integrated soil fertility management using organic and inorganic inputs: Evidence from smallholder African agricultural systems

    Food Policy

    (2003)
  • M. Renkow

    Poverty, productivity, and production environment: A review of the evidence

    Food Policy

    (2000)
  • A. Shepherd

    Approaches to the privatization of fertilizer marketing in Africa

    Food Policy

    (1989)
  • D.G. Abler et al.

    Technology as an agricultural pollution control policy

    American Journal of Agricultural Economics

    (1995)
  • Ahmed, J.K., Falcon, W.P., Timmer, C.P. (1989). “Fertilizer policy for the 1990s”, Development Discussion Paper No. 293...
  • M. Ali et al.

    Productivity growth and resource degradation in Pakistan's Punjab

  • J.M. Antle et al.

    Pesticides, productivity, and farmer health: A Philippine case study

    American Journal of Agricultural Economics

    (1994)
  • J. Baffes

    Structural reforms and price liberalization in Mexican agriculture

    Journal of International Development

    (1998)
  • R. Barker et al.

    Price support vs. input subsidy for food self-sufficiency in developing countries

    American Journal of Agricultural Economics

    (1976)
  • R.H. Bates

    Markets and States in Tropical Africa

    (1981)
  • A. Bhattacharyya et al.

    Measuring price responsiveness under a profit maximization framework

    Journal of Quantitative Economics, New Series

    (2003)
  • H.P. Binswanger et al.

    Technological priorities for farming in Sub-Saharan Africa

    World Bank Research Observer

    (1988)
  • H.P. Binswanger et al.

    Risk aversion and credit constraints in farmers' decision making: A reinterpretation

    Journal of Development Studies

    (1983)
  • B.L. Bumb

    Fertilizer supply in Sub-Saharan Africa: An analysis

  • Bumb, B.L., Teboh, J.F., Atta, J.K., Asenso-Okyere, W.K. (1994). “Ghana policy environment and fertilizer sector...
  • D. Byerlee

    Technical change, productivity, and sustainability in irrigated cropping systems of South Asia: Emerging issues in the post-Green Revolution era

    Journal of International Development

    (1992)
  • K.G. Cassman et al.

    Extrapolating trends from long-term experiments to farmers fields: The case of irrigated rice systems in Asia

  • R. Chambers

    Least cost subsidization alternatives

    American Journal of Agricultural Economics

    (1985)
  • M.A. Chaudhary et al.

    Translog cost function estimation of farmer production and employment relationships

    Pakistan Economic and Social Review

    (1999)
  • Chaudhary, M.K., Harrington, L.W. (1993). “The rice–wheat system in Haryana: Input–output trends and sources of future...
  • J.-S. Choi et al.

    How sensitive are crop yields to price changes and farm programs?

    Journal of Agricultural and Applied Economics

    (1993)
  • B.J. Craig et al.

    Internationally comparable growth, development and research measures

  • S. Daberkow et al.

    Nutrient use and management practices

  • Dalrymple, D.G. (1975). “Evaluating fertilizer subsidies in developing countries”, AID Discussion Paper No. 30. USAID,...
  • H. de Gorter et al.

    Political economy of agricultural policy

  • M. Denbaly et al.

    Dynamic fertilizer nutrient demands for corn: A cointegrated and error-correcting system

    American Journal of Agricultural Economics

    (1993)
  • G.M. Desai

    Policy for rapid growth in the use of modern agricultural inputs

  • Desai, G.M. (1991). “Fertilizer policies: A perspective on price and subsidy issues”, Paper presented at the National...
  • G.M. Desai et al.

    Fertilizer consumption in Sub-Saharan Africa: An analysis of growth and profile of use

  • Desai, G.M., Stone, B. (1987). “Fertilizer market development and national policy in China and India: A comparative...
  • R. Dudal et al.

    The effects of fertilizer use on the environment

  • Evenson, R.E., Avila, A.F. (forthcoming). “FAO data-based TFP measures”. In: Evenson, R.E., Pingali, P. (Eds.),...
  • R.E. Evenson et al.

    Assessing the impact of the Green Revolution, 1960 to 2000

    Science

    (2003)
  • FAO

    Fertilizer Requirements in 2015 and 2030

    (2000)
  • FAO

    The State of Food and Agriculture, 2003–2004

    (2004)
  • G. Feder et al.

    Adoption of agricultural innovations in developing countries: A survey

    Economic Development and Cultural Change

    (1985)
  • G. Feder et al.

    Sending farmers back to school: The impact of farmer field schools in Indonesia

    Review of Agricultural Economics

    (2004)
  • Food and Agricultural Organization of the United Nations (2004). FAOSTAT database....
  • Cited by (39)

    • The relationship between farm size and fertilizer use efficiency: Evidence from China

      2022, Journal of Integrative Agriculture
      Citation Excerpt :

      According to Heisey and Norton (2007), the relative scarcity of agricultural land has been a major underlying cause of the expansion in demand of fertilizers, and more proximate causes include seed varieties and expansion of irrigation or better water control within irrigated systems, declined real fertilizer prices, etc. In addition, soil characteristics, seed varieties, hired labor, applied technology, and education all influence farmers’ use of fertilizers (Qiao et al. 2003; Heisey and Norton 2007; Wu 2011; Huang et al. 2015; Huang and Ding 2016; Li et al. 2017; Mason et al. 2017; Morello et al. 2018). Another important determinant of farmers’ fertilizer use behavior is farm size, as revealed by a range of studies (Zhang et al. 2013; Ju et al. 2016; Wu et al. 2018; Cheng et al. 2019; Hu et al. 2019; Ren et al. 2019; Zhu and Wang 2020).

    • Agricultural inputs, urbanization, and urban-rural income disparity: Evidence from China

      2019, China Economic Review
      Citation Excerpt :

      In terms of intensity, China's agricultural fertilizer application is 328.5 kg per ha, which is substantially higher than the world average of 120 kg per ha (the Ministry of Agriculture of the People's Republic of China, 2015). The main cause for the staggering amount of chemical fertilizer application in China over the past half century is the yield-increasing effect of chemical fertilizers on agricultural production (Heisey & Norton, 2007). Lin (1992) argued that the contribution of the household contract responsibility system (HRS) to the total value of agricultural output over the period 1978–1984 was 46.89%, and the contribution of chemical fertilizer application was 32.20%.

    View all citing articles on Scopus

    The views expressed in this chapter are those of the authors and are not to be attributed to the U.S. Department of Agriculture.

    View full text