The Role of Active Soil Carbon in Influencing the Profitability of
Fertilizer Use: Empirical Evidence from Smallholder Maize Plots in
Tanzania
Abstract
We use recent plot-level panel data from Tanzanian smallholder farmers
to investigate maize yield responses to inorganic fertilizer under
variable soil carbon conditions. Unlike many prior studies which
consider total carbon measurements, we focus on active soil carbon,
which is the component that most influences key soil functions, such as
nutrient cycling and availability. Active soil organic carbon is found
to strongly influence maize yield response to nitrogen fertilizer. These
results highlight important sources of variation in the returns to
fertilizer investments across plots and smallholder farmers in the
region. When farmgate prices for maize and fertilizer are incorporated
into calculations of economic returns, we find that the profitability of
fertilizer use is strongly dependent upon farmgate price ratio
assumptions: under our most optimistic agronomic response estimates,
71% of farmer plots have an average value-cost ratio (AVCR) greater
than 1.5 at a maize-nitrogen price ratio of 0.15. That share drops to
30% at a price ratio of 0.12 and 2% at a price ratio of 0.09. Our
findings provide insights into the intertwined biophysical and economic
underpinnings of low levels of fertilizer use in Tanzania and elsewhere
in the region. Raising active carbon stocks in smallholder systems may
be a strategic priority in many areas for incentivizing greater use of
inorganic fertilizer, reversing land degradation, and achieving
sustainable agricultural intensification.