Thursday, September 28, 2023
NewsOfficials remain alert as fertilizer prices continue to rise

Officials remain alert as fertilizer prices continue to rise

Officials at the Ministry of Agriculture are worried about the global fertilizer scarcity as the nation becomes unable to endure the increase in the price of the agriculture input owing to the conflict between the Ukraine and Russia.

The global fertilizer crunch continued as the country sees a growth in demand for fertilizer due to expansion of irrigation farms and new agriculture projects that prompt farmers to increasingly shift to artificial fertilizer with subsidized price.

“Demand is growing substantially as Meher farms expand and irrigation activities surges across the country,” said Umar Hussein, the Minister of Agriculture, in an event held at Skylight Hotel to honor stakeholders who have been involved in the timely delivery and distribution of fertilizer.  

Last year, the price of fertilizer more than doubled in the international market, a situation that have bulged Ethiopia’s annual budget for the commodity from USD 600 million to USD 1.2 billion.

“The last year has been very challenging due to forex shortage and security concerns that have affected distribution,” Umar said.

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This week, the World Bank warned that there would a further increase in price of fertilizer, with the rapid increase in gas prices turning into an increase in the cost of the commodity.

“The challenge is meeting the immediate demand for fertilizers to support next season’s crops. Current projections suggest that Africa’s unmet demand could reach four million metric tons this year, with West Africa facing the most acute challenges this growing season,” said World Bank Group President, David Malpass, during the opening of the 77th session of the UN General Assembly (UNGA 77) on Tuesday, 13 September 2022.

Last year, the Ministry had to float a tender more than twice as suppliers failed to fulfill contracts due to the global fertilizer crisis, which was first caused by the coronavirus pandemic and then worsened by the war between Russia and Ukraine, which supply over 50 percent of inputs needed to produce urea.

“Taking a lesson from last year, we are in contact with potential suppliers to avoid delays. Invitations have been already made,” said Sophia Kassa (PhD), State Minister for Investment and Input Sector at the ministry, told The Reporter.

During the last fiscal year, almost 13 million quintals of fertilizer was supplied by Fertiglobe, one of the largest producers of the nitrogen fertilizer in the Middle East, and Morroco OCP, a renowned supplier in Ethiopia, where it is currently building a fertilizer plant in partnership with the government.

The government expended a total of 64.5 billion birr for the procurement, shipment and distribution of fertilizer last year. It accounts for 11.4 percent of the budget during the same period.

The government had to allocate another 15 billion birr in subsidy as farmers become unable to withstand the surge in price of fertilize quadrupled in the local market.

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