The government should allocate funds to pay off Rwf22 billion owed in arrears to agro-dealers for agricultural input they supplied to farmers under its subsidy programme, senators urged on Wednesday, February 19.

They made the call as the plenary sitting of the Senate approved the report of the Committee on Economic Development and Finance on its assessment of the government’s actions in supplying agricultural inputs to farmers.

Government subsidies are a key component in Rwanda's efforts to boost food production and agricultural productivity as they help lower the costs of seeds and fertilisers, according to farmers.

Agro-dealers are authorised distributors of subsidised agricultural inputs. They serve as a link between fertiliser companies and farmers who need these inputs to improve their crop yields.

ALSO READ: Govt earmarks over Rwf54bn for fertilisers, seeds

The Ministry of Finance and Economic Planning (MINECOFIN) allocates budgets to districts for agricultural input subsidies to help farmers cover the cost of seeds and fertilisers.

However, senators indicated that districts currently owe about Rwf22 billion to entities (agro-dealers) that supplied farm inputs, including seeds and fertilisers, an issue that points to inadequate funding allocation.

"This is a major issue that is hindering their businesses," remarked Senator Fulgence Nsegiyumva,Chairperson of the Committee on Economic Development and Finance.

"These arrears must be cleared with the availability of a dedicated budget for repayment,” he observed.

Senator Pélagie Uwera emphasized the need to accelerate payment of arrears, highlighting that failure to do so negatively impacts agro-dealers, making them unable to continue supporting food production efforts.

Senator Emmanuel Havugimana also stressed that agro-dealers must be paid the money they are owed, stating that the outstanding payments represent a major challenge to their continued investment in the sector.

ALSO READ: RAB explains disparity in fertiliser supply

Delays in payments could discourage investors in the agricultural input sector, which may make them shift their focus to other ventures, senators warned.

To address the issue, they called for an increase in the budget allocation to districts, specifically for the payment of government subsidies on agricultural inputs.

Senator Nsengiyumva held that such a government financial support to farmers is important to the country’s goal of increasing agricultural output by 50 per cent for priority food crops, as well as achieving a least 6 per cent annual growth in agricultural output, as outlined in the National Strategy for Transformation (NST2) running from 2024 through 2029.

Need to revise transport fees

Another concern raised by the senators is the transport payment agro-dealers should get per kilo when purchasing agricultural inputs from different districts.

For example, an agro-dealer from Nyamasheke District, purchasing inputs from Musanze District, is paid Rwf15 per kilo, Nsengiyumva pointed out.

Senators observed that these fees, which were established in 2017, are no longer reflective of current market realities.

With fuel prices nearly doubling since 2017, senators argue that these rates must be revised to ensure a fair return on investment for agro-dealers.

"If a litre of petrol or diesel was Rwf800 or Rwf900 in 2017, it is almost Rwf1,700 currently,” Nsengiyumva said, pointing out that this is a challenge for agro-dealers.

In the current fiscal year 2024/2025, which will end on June 30, the government allocated more than Rwf54 billion for subsidies on mineral fertilisers, and seeds (maize, wheat, and soybean), according to information from Rwanda Agriculture and Animal Resources (RAB).

Overall, during the current fiscal year, more than 6.8 million kilos of seeds are expected to be delivered to farmers, while over 78.5 million kilos of chemical fertilisers are projected to be used for different crops including those which are not covered under seed subsidy, such as Irish potatoes.