Overall market risk: Countries in the region are grappling with challenging economic conditions, compounded by high inflation rates, macroeconomic instability, and the impacts of climate change. These factors have led to soaring food and energy prices, increased production costs, and limited industrial growth in local markets. According to a recent report by PWC, the growth outlook for the region has been revised down from 33% to 26% for 2023, reflecting the severity of the situation. Moreover, power supply issues are exacerbating the challenges, particularly in the southern region.
In the fertilizer sector, prices have remained elevated throughout February. Despite this, governments are actively devising strategies to ensure that fertilizers remain accessible and affordable for farmers. In Zambia, the Ministry of Agriculture is set to announce a tender for the 2024/25 period, aiming to procure up to 300,000 metric tons. In Rwanda, subsidized fertilizers are available to farmers at prices ranging from Rwf 591 to 748. Other countries like Mozambique and Malawi are facing forex shortages as a major obstacle. Meanwhile, in Kenya, farmers can access subsidized fertilizers at NCPB depots for Ksh 3,500 ($20) per 50 kilograms.
Availability and Affordability: In the East African region, importers and distributors are actively shipping and positioning fertilizers ahead of the upcoming main planting season. Specifically in Kenya, between January and February, 107,000 metric tons of fertilizers have been imported into the country. Additionally, the Kenya Tea Development Agency (KTDA) is in the process of procuring its customary 97,000 metric tons for the season.
In contrast, Ethiopia‘s East African Business Corporation (EABC) has successfully procured 1.94 million metric tons of fertilizer, with 1.58 million metric tons (81%) being delivered to fulfil the reported demand of 2.3 million tons for the 2023/24 cropping season. Meanwhile, in Tanzania, the country’s fertilizer stocks currently stand at approximately 300,000 metric tons, providing a positive outlook with the projection that the country’s demand will be met by June or July.
In the southern African region, where planting has already concluded, there is a gradual decrease in demand for fertilizers. The planting of main season cereals is wrapping up under varied conditions due to delayed rainfall onset, and forecasted El Niño-induced dry conditions are expected to affect cropping outcomes. Nonetheless, preparations for stockpiling are underway as the winter cropping season approaches.
Distribution: Throughout the region, there have been no significant issues reported regarding the transportation and distribution of fertilizers. However, at the port of Mombasa, the Kenya Ship Agents Association (KSAA) has indicated the potential for increased port charges due to conflicts along the Red Sea route. This conflict has led major shipping lines to reroute vessels, which presents a costly alternative impacting businesses and consumers within the East African Community (EAC). Meanwhile, Beira continues to encounter challenges with delays in the offloading process.