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What can you tell me about the relationship between price and quality in fertilizers?

Good day,

Thank you for your inquiry.  Our database has a lot of reports about the agriculture industry and a couple of reports that discusses this relationship

Report 1: Low quality, low returns, low adoption, International Growth Centre, Aug 2015

This policy brief delves into some reasons for poor agricultural output in Sub-Saharan Africa, specifically Uganda, one of which is insufficient fertilizer application. Fertilizer samples were tested for quality, which is represented by the nitrogen content.  This study showed that farmers could not buy a more expensive product and expect a high purity of fertilizer.

“With no price signal present, the market becomes dysfunctional as the incentive to supply high quality may vanish if enough potential clients stop trusting price as a quality measure” (pg 3).

— International Growth Centre, Aug 2015

In the June 2015 version of this same report, the results of the complete study showed that the market is characterized by low quality, low-trust and low adoption equilibrium.  Researchers found that adopting modern inputs with average retail quality is not profitable and thus, ultimately hinders agricultural output.

There is more discussion is included on what constitutes a low quality product and how these products are made as well as how quality is impacted during the supply chain process.

price quality fertilizer

—  International Growth Centre, Aug 2015

Report 2: Workshop Doing Business in Zambia,, July 2014

In this report there is a section discussing the price and quality of animal feed and fertilizer in Zambia.  The reporters discussed that local sourcing of input materials allows the price to remain low.  Even for a premium product, prices are low because of the low cost of production and minimal transport cost that is shared with the end customer (pg 51).
Report 3:  Working Paper 307, Fertilizer market in India, August 2015

This paper discusses a detailed chronology of the fertilizer subsidy regulations in India from 1955 through 2014 starting from the Fertilizer Control Order (FCO) that sought to regulate the sale, price and quality of fertilizers.

In 2010, “there has also been a huge increase in the world price of the fertilizers and inputs. In fact, 94 per cent of the increase in subsidy was attributable to the increase in prices while only 6 per cent was due to increase in consumption”(pg 22).

— Fertilizer market in India, August 2015

There is detailed discussion on the prices of urea, which effects quality, and price of the fertilizer.

I hope you find this useful, and can see that there is a lot of useful information available through the portal about the agriculture industry. If you have any additional needs or questions about our reports, please feel free to contact us.

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