Subsidies must be felt by final consumer
Wednesday, October 26, 2022

The government has introduced a subsidy on fertilisers, this time targeting specifically farmers of Irish potatoes, one of the main staple foods in the country. This development is envisaged to help tame the surging price of the produce.

Following the subsidy, a farmer will pay Rwf603 on a kilogramme of the NPK 17-17-17 fertilisers, which represents just under 40 per cent of the Rwf1530 that a kilogramme of this type of fertiliser costs.

This is yet another effort by the government to bring down the costs associated with farming which will in turn trickle down on the final consumer, or at least this is what is being envisaged.

For instance, the expectation is that the price of potatoes, which currently goes up to Rwf600 a kilogramme is out of reach to many households, should be able to come down, courtesy of the fresh subsidy.

During a recent meeting that brought together top cadres of the ruling party – RPF-Inkotanyi – and to which senior leaders affiliated to other parties and members of civil society were invited, different speakers complained over the fact that some of these subsidies do not trickle down to the common citizen.

This is a deplorable situation because, it means that when the government introduces a subsidy on a crucial product, it means revenue lost. That revenue lost means that citizens will have to miss out on a service that would have been funded by that money.

So when a subsidy is introduced and ends up benefitting some middlemen at the expense of the citizen, the latter is short-changed on two fronts; they miss out on the service foregone and still continue to buy commodities expensively.

On the issue of Irish potatoes, several issues have over the years ailed the sector, mainly gravitating around the shaky value chain of the commodities, which at times ended up affecting not just the final consumer, but also the farmer, who toil to get the produce on the market.

For instance, interventions by the government through the Ministry of Trade and Industry, by introducing prices of potatoes have ended up not being respected, mainly due to similar challenges.