Problems of fertiliser supply

Ahmed Kotb , Tuesday 11 Jan 2022

Efforts are continuing to make sure Egypt’s farmers receive the fertilisers they need amid supply problems and rising prices, reports Ahmed Kotb

Problems of fertiliser supply
Some 22 million tons of nitrogenous fertilisers are produced annually in Egypt

A shortage of fertilisers has hit the Egyptian market over the past few weeks, leading some farmers to resort to the black market to acquire what they need for their land and leading to increasing prices.

According to the Ministry of Agriculture and Land Reclamation, the higher prices of subsidised fertilisers in Egypt are mainly due to global increases in the prices of natural gas and agricultural supplies.

The prices of fertilisers sold to agents and distributors this month recorded LE8,800 per ton of urea and LE8,600 per ton of nitrates. By the time they reach the farmer, prices can reach around LE10,000 per ton.

Fertiliser companies are obliged to supply 55 per cent of their production to the Ministry of Agriculture to sell at the subsidised price of LE4,800 per ton. Ten per cent can be sold at free-market prices, and the remaining 35 per cent can be exported.

Global fertiliser prices stand at around LE14,000 per ton.

To resolve the problem, the cabinet has decided to link the issuing of export licences to a commitment by the fertiliser companies to supply the 55 per cent of their production they are contracted for to the Ministry of Agriculture.

The ministry announced on Sunday that all types of fertilisers are now available in agricultural cooperatives stores, and a hotline has been set up to receive complaints if farmers encounter difficulties.

According to a press statement, fertilisers are disbursed through inspection committees to those who cultivate the land, and not just have possession of it, to ensure that the subsidised fertilisers reach the correct beneficiaries.

The ministry stated that consignments are monitored from the time they leave the factories until they reach the agricultural cooperatives.

Khaled Abul-Makarem, head of the Chemical Industries Export Council at the Federation of Egyptian Industries, said that fertiliser prices are expected to continue to rise in the coming months on the back of rising global prices.

“The current price is low compared to the global prices of fertilisers,” he pointed out.

He added that the recent rises in the prices of subsidised fertilisers had come as a result of unprecedented rises in international prices due to the natural-gas crisis in Europe and China.

In October last year, the government decided to increase the price of natural gas for fertiliser, steel, and petrochemical factories from $4.5 to $5.75 per million British thermal units (mBtu) as a result of the global rise in gas prices.

There have also been rises in the cost of raw materials and higher operating costs, both of which have affected the price of the final product.

Abul-Makarem said that the cabinet’s decision to prevent the export of fertilisers until 55 per cent of production had been supplied to agricultural cooperatives at the subsidised price had encouraged factories to increase their production by approximately 15 per cent in order to benefit from the export share, especially given the currently high global prices.

He said that the available amounts of natural gas and raw materials would determine any increases in production, which could vary from one factory to another. The factories’ current production capacity is estimated at about 22 million tons of nitrogenous fertilisers, which cover domestic consumption even after the expansion of agricultural land by about 20 per cent.

Data from the Export Council for Chemical Industries and Fertilisers revealed that the sector’s exports came in first place in the total volume of Egyptian exports during 2021 to record a growth of 43 per cent.

According to the data, exports amounted to $6.6 billion, compared to $4.165 billion for the same period in 2020.

The EU countries accounted for the largest share at 29 per cent of the total. The Asian countries came in second followed by the Arab countries. Chemical exports account for about 22 per cent of Egyptian non-oil exports.

*A version of this article appears in print in the 13 January, 2022 edition of Al-Ahram Weekly.

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