Finding Fertilizer Expensive

The latest fertilizer tender, opened last week on Tuesday, March 27 was yet another failure in attracting interested bidders, as has become the trend for tenders opened over the last three months.

With this harvest year projected to have the highest agricultural productivity rates, this trend has alarmed the Oromia Region Rural and Agriculture Development Bureau (ORRADB), which is attempting to import the urgently needed 25,000tn of Urea fertilizer through the Lome-Adama Cooperatives Union.

The Bureau wrote a letter to the Ministry of Agriculture and Rural Development's (MoARD) Agricultural Inputs Market Department requesting that the Union be permitted to import the fertilizer and that conditions be implemented that would allow for that, two weeks ago.

The Ethiopian agricultural sector needs 650,000tn of fertilizer in the current budget year; 145,000tn, mainly Urea, is in stock in the country. the Oromia Regional State alone needs two million quintals of fertilizer; five unions, Tosa, Yerer, Lome Adama, Biftu Selale and Gibe Dedesa won the tender to import 1.25 million quintals of the total needed in the Region.

The Oromia Cooperative Commission signed an agreement with Wondo Trading two weeks ago for the purchase of DAP fertilizer on behalf of the Regional government. Wondo has 200,000qt of DAP in stock from last year's import. The Regional State bought this fertilizer at market price in Adama, which is 372 Br a quintal, not including interest.

Though the region has secured a substantial amount of fertilizer, it is still in need of 250,000qt of Urea. To bring this fertilizer into the country, discussions have begun with Lome Adama.

Demere Demissie, manager of Lome Adama, told Fortune that the Union had accepted the Regional State's request in principle, but is conducting discussions at the board level and with member farmers to assess if there is anything to be done concerning the high price before signing the deal.

"So far, it would be difficult to accept the offer because of the increase in international prices," said Demere.

A tonne of Urea, which last month was 388.70 dollars, is now 400 dollars.

"We have to make sure that the farmers and unions can afford to buy the fertilizer they import at these prices because purchasing stock for next year would drive them out of the market," said Demere.

A fertilizer expert told Fortune that the production cost of a single tonne of fertilizer does not exceed 200 dollars.

"The drastic increase in international prices is mainly due to an increase in fuel prices," said the expert. "Many fertilizer producing companies were forced out of business as a result."

The Cooperatives Unions and the Agricultural Input Supply Enterprise (AISE) have imported 225,000tn of fertilizer. Of this, 100,000tn is being transported into the country, sources from MoARD, disclosed to Fortune.

In the 2005/2006 budget year, 376,000tn of fertilizer was imported while 650,000tn was needed.

The increase in the figure is a result of the government's plan to increase agricultural inputs. Bogale Tolosa (PhD), input sector head at ORRADB, told Fortune that they are distributing the fertilizer to farmers and that they are negotiating with Lome Adama and the Federal Agricultural Development Minister to import the needed Urea.