The government is set to spend more than Rwf64 billion subsidising fertilisers in the 2026/27 financial year as it shields farmers from rising global prices while pursuing higher agricultural productivity.

The allocation, up from just over Rwf39 billion a year earlier, comes after the government increased subsidies for some of the country's most widely used fertilisers, ensuring farmers continue buying them below market prices despite sharp increases in international costs.

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But how exactly does the subsidy scheme work? Why do urea, DAP and NPK receive the largest government support, and what is driving the rising cost to taxpayers?

The answers are contained in the Ministerial Guidelines for the Distribution of Subsidised Agricultural Inputs, signed by Minister of Agriculture and Animal Resources Telesphore Ndabamenye on July 1 and effective from July 1 to December 31.

What changed?

The revised guidelines increased subsidies for key fertilisers used by farmers during the 2027 Season A planting season.

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The government now subsidises urea by 45 per cent, up from 30 per cent, while DAP attracts a 46 per cent subsidy and NPK 17:17:17 receives a 43 per cent subsidy.

The increase follows a surge in international fertiliser prices that the government says would have significantly raised production costs for farmers had the additional burden not been absorbed through public funding.

Presenting government activities to a joint sitting of Parliament on July 9, Prime Minister Justin Nsengiyumva said international fertiliser prices rose by between 15 and 66 per cent between February and June this year.

To cushion farmers, he said, the government decided to absorb about half of those additional costs, pushing the annual fertiliser subsidy budget beyond Rwf64 billion.

"The government has committed to covering 50 per cent of the increase in fertiliser prices for farmers, in addition to the subsidy that was already being provided,” Nsengiyumva noted.

These measures, he added, will ensure that fertiliser remains affordable for farmers and will also contribute to increasing its use.

How the subsidy works

Rather than paying suppliers before fertiliser reaches farmers, the subsidy operates as a reimbursement system.

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Farmers first register the quantity of fertiliser they require through the Smart Nkunganire System, using their national identity card and land parcel number. Registration can be completed by mobile phone, through sector agronomists or at designated registration centres.

Licensed agro-dealers then place orders through the MOPA application before fertiliser is supplied to farmers at the subsidised price.

For example, the official retail price of one kilogramme of urea is Rwf1,980. Under the revised subsidy, the government contributes Rwf890, leaving the farmer to pay a maximum of Rwf1,090, according to the ministerial guidelines.

Suppliers do not immediately receive the government's contribution.

Instead, every delivery must first be electronically verified by four parties: the agro-dealer, the Agro-Processing Trust Corporation (APTC), the supplying company, and the sector agriculture officer.

Only after delivery notes and invoices have been validated by all four does the district release the subsidy payment, reimbursing suppliers for the government's share of the fertiliser cost.

In practice, this means suppliers initially sell fertiliser at the subsidised price before recovering the government's contribution once every transaction has been verified.

The guidelines also allow agro-dealers to offer discounts beyond the government subsidy, provided they do not charge above the official ceiling price.

Any additional discounts must be reported to the Rwanda Agriculture and Animal Resources Development Board (RAB) and APTC.

Fertilisers with highest subsidies

The government subsidises a range of fertiliser products, including Kynoplus, Twihaze, Ongera, Amidas, Cereal Powergrow, Winner, Otesha and Microp blends, and subsidy rates vary between 18 and 46 per cent.

The highest subsidies are reserved for urea, DAP and NPK because they account for the overwhelming majority of mineral fertiliser used on Rwanda's food crops.

Minister Ndabamenye said the three products receive greater government support because they are the most widely used fertilisers by farmers.

The Ministry of Agriculture and Animal Resources (Minagri)'s 2024/2025 Annual Report shows Rwanda applied 92,520.2 metric tonnes of mineral fertiliser to food crops during the fiscal year.

Of that total, NPK accounted for 26.5 per cent, DAP for 25.7 per cent, and urea for 24.5 per cent.

Together, the three fertilisers represented 76.7 per cent of all mineral fertilisers applied to food crops, making them central to crop production across the country.

The guidelines identify maize, beans, wheat, rice, soybeans, potatoes, cassava, bananas, vegetables, and fruit trees among the crops eligible for subsidised fertiliser.

Supporting productivity

The expanded subsidy also aligns with the government's broader efforts to increase fertiliser use and improve agricultural productivity.

The premier told Parliament that fertiliser application has increased from 73 kilogrammes per hectare in 2024 to 80 kilogrammes per hectare in 2026, with the government targeting 94.6 kilogrammes per hectare by 2029.

Meanwhile, announcing the revised subsidy rates on July 2, Ndabamenye said Rwanda plans to distribute about 60,000 tonnes of mineral fertiliser during the 2027A planting season, including 25,000 tonnes that will be produced locally.

As global fertiliser prices remain volatile, the subsidy programme is expected to remain central to Rwanda's efforts to keep fertiliser affordable while raising agricultural productivity, according to Minagri.