Egypt partially liberalises fertiliser prices, raising supply fears

Marwa Hussein, Tuesday 14 Oct 2014

Prices of subsidised fertilisers increased by a third, drawing complaints from producers and farmers' groups

Farmers harvest rice
Farmers harvest rice (Photo: Reuters)

A price hike in subsidised fertilisers has sparked fears among local farmers that they'll have to resort to the black market to fulfill their demands.

Prices of subsidised fertilisers were raised by 33 percent on the local market, based on demand from fertiliser companies.

The price of a ton of Urea was raised to LE2,000 ($281) per ton, compared to LE1,500 previously, while prices of nitrate fertilisers went up to LE1,900.

The decision will mainly benefit public producers Delta Co. for Fertilisers and Abu Qir Fertilisers Co., which deliver the highest quantity of subsidised fertilisers in the country. However, private producers will sheer as well, as they deliver part of their production to the government without an amendment.

"Production cost has increased as gas prices have increased gradually over the last few years and companies cumulated losses," said Sherif El-Gabaly, head of Polyserve Fertiliser and Chemical Group.

In July, the government raised the natural gas price for fertiliser companies from $4 per 1 million British Thermal Units (BTU), as part of a bigger plan to cut fuel subsidies.

Mohamed El-Kheshen, head of the fertilisers dealers' division at the Federation of Egyptian Chambers of Commerce, told Ahram Online that free Urea prices have reached LE2,800 ($394) per ton on the local market, close to international prices.

"The government gives with one hand and takes with the other. They just promised to reduce interest rate on farmers' loans from the agriculture bank and now they raise fertiliser prices," said Hashem Farag, head of the Small Farmers Union of Giza.

However, he thinks farmers will accept the price rise if the government makes available the quantities needed and ends the black market.

Each farmer with a right to subsidised fertilisers should accordingly receive 12 bags of 50 kilo fertiliser annually per feddan, with each bag priced at LE75 ($10.50).

"What really happens is that farmers hardly receive a third of this quantity and are obliged to seek their needs on the black market with prices that go up to LE180," Farag said.

He demands the government to mark the bags of subsidised fertilisers to inhibit their sales on the black market.

Subsidised fertilisers are distributed to villages by branches of the Bank for Development and Agriculture Credit as well as agriculture cooperatives.

Short link: