Factors explaining the low and variable profitability of fertilizer application to maize in Zambia

It is widely recognized that an African green revolution will require greater use of inorganic fertilizers. Often-made comparisons note that fertilizer use rates in Africa are just 10-20% of those in Asia, Europe and the Americas. Most attempts to explain relatively low-adoption of fertilizer assume yield responses to inorganic fertilization warrant higher application rates and hypothesize that observed use rates are limited by market-based factors. Another explanation may be that application rates are low because African yields are less responsive to inorganic fertilizer than yields in other regions, and less responsive than analysts perceive. Examining the case of Zambia, we evaluate whether yield response to fertilizers could explain adoption and application rates. A model of yield response is constructed and a combination of estimators is employed to mitigate potential biases related to correlation between fertilizer use and unobserved heterogeneity as well as stochastic shocks. Results indicate higher fertilization rates would be marginally profitable or unprofitable in many cases given commercial fertilizer and maize prices. Phosphoric fertilizer is particularly unprofitable on acidic soils, which are common in Zambia and other areas of sub-Saharan Africa. We propose feasible recommendations for diversifying the current government strategy to enhance crop productivity.