Overall market risk: The East African Association (EAA) reports that the Eastern Africa bloc is leading regional GDP growth, with an impressive average rate of 6.5 percent. Despite this positive outlook, the region faces significant challenges due to rising fiscal pressures, primarily driven by increasing sovereign debts, which are tightening financial conditions and threatening economic stability. In Southern Africa, the situation is worsened by an El Niño-induced drought, which has further strained the economic landscape. According to the Southern African Development Community (SADC), 68 million people in the region are currently facing drought conditions, which have affected crop and livestock production, leading to food shortages since early 2024.
In the fertilizer market, India’s re-entry to secure DAP tonnages is expected to significantly impact prices. Ethiopia has also made an unexpected move by initiating a tender for 1.2 million MT of DAP, which could increase the number of suppliers in the market. As for Urea, trading slowed during the first week of August following India’s purchase of half the usual tonnage in July. However, with the recent closure of India’s tender and an extended delivery window, supply-demand pressures are expected to ease for most producers. Meanwhile, the global potash market remains stable.
Availability and Affordability: Countries in the regions are reporting adequate fertilizer stocks in August. In Eastern areas, farmers are preparing for the short rain season starting in September/October, which may lead to increased imports. In the Southern region, the winter cropping season has just ended even as some countries continue to grapple with severe drought.
In Kenya, traders are gearing up for the short rain-planting season by importing products and increasing domestic distribution. The government on the other hand continues to issue and announce new tenders to ensure a steady supply of fertilizer for its subsidy program during the upcoming short rain season.
Tanzania recently signed an MoU with other key fertilizer industry stakeholders. This agreement aims to establish a Urea fertilizer manufacturing facility with an annual production capacity of 1.3 million MT. The facility will be situated at the Likong’o-Mchinga site in the Lindi region, adjacent to the Indian Ocean, and is anticipated to be completed within 36 months. Once operational, the facility is anticipated to meet Tanzania’s domestic demand of 700,000 MT per year while also producing a surplus for export
In Ethiopia, of the 1.94 million MT of fertilizer purchased by the Ethiopian Agricultural Business Corporation (EABC), 1.82 million MT has arrived at Djibouti and Lamu ports, representing 93.8% of the annual target. Of this, 87% has been transported to central and farmers’ cooperative union warehouses and distributed to farmers as planned by the Ministry of Agriculture. However, ongoing conflicts, particularly in the Amhara region, are causing disruptions and delays in the delivery of agricultural inputs, including fertilizers.
In Rwanda, a positive trend is being observed. About 75% of the annual demand has been secured and fertilizer importation will likely surpass 100,000 MT this year.
An uptick in imports is also being observed in Malawi, even as the country continues to face challenges with forex. About 85,000 MT of Urea and NPK has been supplied whilst 130,000 MT is at the ports of Beira and Nacala.
In Zambia, a consistent supply of D-Compound and Urea is ongoing. The Ministry of Agriculture has invited eligible bidders to participate in the E-Voucher Program to supply fertilizer and other agricultural inputs under FISP for the 2024/25 agricultural season, targeting 739,266 beneficiaries.
Distribution: Most countries in the region are experiencing normal operations at their ports and with in-country transportation. However, Ethiopia is facing challenges in distributing fertilizers and other agricultural inputs due to the ongoing conflict in the Amhara region. According to a report by Cornelder de Moçambique, the Port of Beira saw cargo volumes surge by 122%, reaching a record high of 442,000 MT in July, compared to the same period in July 2023. This significant increase was primarily driven by the growth in imports of clinker and maize for the domestic market, as well as a substantial rise in wheat, equipment, and sulphur imports destined for neighboring countries. Freight costs to East Africa have increased. Month-over-month, rates from the Baltic and the Middle East to East Africa have decreased to $81 per MT and $25 per MT, respectively, while rates to South Africa have dropped to $45 per MT and $23 per MT.