Month: October 2024

East Africa and Southern Africa

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Overall market risk: Inflation in East and Southern Africa remains a significant economic concern, although some countries are starting to see signs of stabilization. Across sub-Saharan Africa, inflation is expected to decrease, thanks to factors like the normalization of global supply chains, falling commodity prices, and monetary tightening. It, however, remains above pre-pandemic levels in most of the region, driven by high food and energy costs, which account for a large part of household spending in these countries. Countries like Zimbabwe, Malawi, and Ethiopia continue to experience some of the highest inflation rates on the continent, with Zimbabwe leading the pack. The region’s inflation challenges are further compounded by currency depreciation and public debt, making it essential for governments to manage monetary policy carefully to avoid stalling growth​(Business Insider Africa) (World Bank).

In Southern Africa, six countries declared a state of emergency linked to severe drought including Botswana, Lesotho, Namibia, Malawi, Zambia, and Zimbabwe. These El Niño-induced weather conditions have led to widespread crop failure, water shortages, and livestock deaths. More than half of the annual harvest has been destroyed, leading to rapidly depleting stocks and increasing food prices (Relief Web,2024). This could affect the demand and consumption of fertilizers in the region.

In the global fertilizer market, India and Ethiopia tenders continue to exert pressure in the nitrogen and phosphates markets. India recently closed a tender of over 1 million for Urea and surprisingly opened another one. This resulted in a rise in Urea prices. For Phosphates, with India seeking DAP from any available supply and Ethiopia seeking 360,000 MT of the same, there is an anticipated rise in DAP prices. The potash market largely remains unchanged.

Availability and Affordability: In East Africa, the short rain season is ongoing. Traders and suppliers are busy procuring fertilizers for farmers.

In Kenya, Urea shipment for One Acre Fund and DAP from Maaden are set to arrive in early October.  KTDA’s second shipment of  NPK 26-5-5 is also set for arrival this October.

In Tanzania, adequate stocks of fertilizers have been reported. Over 500,000 MT of different fertilizers have been imported into the country as of September.

In Ethiopia, the Ministry of Agriculture (MoA) and EABC have initiated procurement of fertilizers early for the 2025 crop year. Currently, they are in the process of seeking for 250,000 MT of Urea and 360,000 MT of DAP.

In Rwanda, the country is well serviced with 75% of its annual requirement already sourced and delivered in the country. For the 2025A season, it is expected that Rwanda’s government will increase its budget allocation to ensure affordable fertilizers to farmers through partnerships with input suppliers.

In Zambia, adequate stocks of Urea and D-Compound have been registered. The Government’s Sustainable Agricultural Financing Facility (SAFF) has continued in the 2024/25 Farming season with applications ongoing in September.

Malawi is also reporting increased importation of Urea and NPK as the planting season approaches. So far, over 100,000 MT of fertilizers has been brought into the country.

In South Africa, there is an expected increase in demand for MAP as the season approaches.

Distribution: Normal in-country and cross-border operations are ongoing at most ports and border points. Mombasa port in Kenya has announced plans to expand the old terminal. This comes with the anticipation of an increase in container handling in 2024. Freight costs to East Africa have slightly dropped. Month-over-month, rates from the Baltic and the Middle East to East Africa have decreased to $80 per MT and $24 per MT, respectively, while rates to South Africa have dropped to $46 per MT and $22 per MT.

West Africa

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Overall market risk: In September 2024, West Africa’s fertilizer situation varied across countries, shaped by climatic conditions and agricultural policies. In Ivory Coast, a 20.1% drop in rainfall compared to the previous year disrupted farming and reduced fertilizer demand, yet imports remained stable at around 435,000 MT, with prices for Urea at CFA 21,000 ($35) and NPK 15-15-15 at CFA 22,000 ($37). Ghana struggled with drought, which impacted crop production, particularly in the north, leading to a shortage of NPK 23-10-5, prompting government export bans and support for farmers. In Nigeria, the transition to harvest reduced fertilizer demand, resulting in stable or slightly lower prices due to reduced demand. Conversely, Sierra Leone faced skyrocketing fertilizer prices amid high import dependence and inflation. Benin experienced a shorter rainy season which affected demand, but substantial government subsidy was provided to keep prices low. In Togo, low fertilizer transactions followed the main planting season, although demand is expected to rise with favorable weather forecasts. Senegal encountered shortages in fertilizers like NPK 6-20-10 despite government subsidies. Meanwhile, The Gambia benefited from improved crop production due to favorable conditions and government support, yet overall fertilizer demand decreased as most crops neared harvest.

Generally, the fertilizer market across West Africa experienced stable yet high prices despite the reduced demand due to the ending raining season. Overall, fertilizer supply has been adequate to meet demand country to country, ensuring that agricultural activities continued uninterrupted.

Benin: The 2024 planting season is nearing its end, marked by August – September rainfall totaling 60 mm, lower than the previous year. The rainy season has shortened, with increasingly irregular and intense rainfall, and long droughts lasting up to 30 days in central and southern regions. In contrast, northern areas, including Borgou, Donga, and Atacora, saw an early start to the rainy season, which disrupted normal farming schedules and reduced fertilizer demand. However, this decline has not had a significant impact, as most crops have matured, with some already being harvested in the south. The government has allocated over CFA 24 billion to subsidize fertilizers, allowing farmers to purchase a 50 kg bag of Urea for CFA 15,000 (US$25) and NPK for CFA 17,000 (US$28), while non-subsidized prices are much higher. To protect these subsidies, authorities are cracking down on illegal fertilizer exports, with border enforcement tasked to stop such activities.

Côte d’Ivoire: The major agricultural season is nearing its end, with 20.1% less rainfall from January to August, compared to the same period in 2023, according to meteorological reports. These irregular weather patterns disrupted farming activities, including fertilizer application, leading to a significant drop in fertilizer demand. Despite this, fertilizer supply remains steady, with an additional 48,000 MT delivered, bringing total imports from January to September to around 435,000 MT. This stockpile is crucial for off-season demand and the upcoming cotton tender, which requires 30,720 MT of Urea and 102,000 MT of NPK 15-15-15+6S+1B by October. Fertilizer prices have remained stable, with Urea priced at CFA 21,000 ($35) per 50 kg bag, NPK 0-23-19 at CFA 19,500 ($33), and NPK 15-15-15 at CFA 22,000 ($37). Cotton fertilizer prices remain unchanged from last year, with Urea being sole at CFA 17,050 ($28) and NPK 15-15-15+6S+1B at CFA 18,100 ($30) per 50 kg bag.

Gambia: Over the past three years, crop production in The Gambia has steadily increased, with a notable rise in September 2024 due to favorable weather conditions, subsidized fertilizers, and affordable high-yield seeds. As most crops are now ready for harvest, fertilizer demand has significantly dropped, except for minimal needs from vegetable growers and some rice farms in key regions. Despite heavy September floods washing away some fertilizers, prices remain stable at D1100 (US$15.80) per 50 kg bag, thanks to government subsidies and price controls, with sufficient stock available in local markets.

Ghana: In August through to September, Ghana faced a drought that severely affected crop production, especially in the northern regions. While most fertilizers remain available, a shortage of NPK 23-10-5 in early September shifted demand to other NPK grades. Farmers who planted early were hit hardest by the drought, but late-planters have started to recover with the return of rains. Rising food prices, particularly for cereals, have led some farmers to withhold their stock, anticipating further price increases. In response, the government implemented measures, including a ban on grain exports, rice and maize imports, financial aid for affected farmers, and support for irrigation-based farming. While the minor farming season has begun in the south, the market remains subdued. Most fertilizer prices have held steady, except for NPK 23-10-5, which rose from GHS 430 ($27) to GHS 540 ($34) per 50 kg bag, with retail prices expected to follow.

Liberia: As Liberia’s rainy season nears its end, fertilizer demand is expected to decline. The government is pursuing international partnerships, including talks with China and Indonesia, to boost agricultural job creation, though no direct subsidies for agro-inputs exist. Concerns are rising about the effectiveness of duty-free policies at ports. Many farmers prefer purchasing fertilizers from border areas near Guinea and Ivory Coast to avoid high transportation costs from central agro-dealers in Monrovia, who primarily supply NGOs and projects. Fertilizer prices, including the popular NPK 15-15-15 and Urea (both sold at $55 per 50 kg), remain high, driven by the main farming season and reliance on fertilizers to increase yields. The Russia-Ukraine crisis and the lack of a local fertilizer plant have also contributed to high prices. While the U.S. dollar is the primary currency for transactions, the exchange rate with the Liberian dollar has improved to 1 USD = 192 LD.

Nigeria: As September progresses, Nigeria’s wet season farming is coming to an end, transitioning into the harvest phase. With most fertilization completed, fertilizer demand has naturally declined, leading to stable or slightly reduced prices across the country despite rising production and logistics costs, including fuel and the ex-factory price of Urea, which remains at ₦31,000 per 50 kg bag. Government subsidies have also played a role in stabilizing prices. Fertilizer demand is tapering off as farmers finish their applications, which is reducing pressure on prices. In September, the average retail price of Urea fell by 1.4%, from ₦710,400 ($447) in August to ₦700,400 ($422), while NPK 15-15-15 dropped by 0.4% and NPK 20-10-10 by 0.3%. Fertilizer prices are calculated using an exchange rate of $1 to ₦1,660, up from ₦1,588 in August 2024.

Senegal: In September, the agricultural season is nearing its end, with early reports looking good regarding consumption. However, there has been a shortage of NPK 6-20-10 fertilizer due to higher-than-expected demand. This rise in demand reflects the effective use of fertilizers during the rainy season, backed by substantial subsidies amounting to CFA 120 billion for the 2024-2025 season.

Sierra Leone: In September 2024, Sierra Leone’s fertilizer market saw moderate price increases due to rising domestic demand, heavy reliance on imports, and the initial global disruptions caused by the Ukraine-Russia conflict. This volatility led to nearly quadrupled prices for fertilizers like Urea and NPK 15:15:15 in some regions. Inflation at 25.45% and fluctuating exchange rates, with the leone trading at Nle 22.587 per USD (official market) and Nle 24.400 per USD (black market), worsened the situation. Despite lower fuel prices, the depreciation of the leone drove up fertilizer costs, as all fertilizers are imported. Urea prices ranged from Nle 1,100 ($48) to Nle 1,750 ($76), and NPK from Nle 1,000 ($44) to Nle 1,700 ($75), with higher prices in the Western Area compared to the Northern Province. Awareness of fertilizers’ importance is growing, but many farmers lack knowledge about proper application, which highlights the need for educational policies. While demand was strong in early September, it is expected to decline as the rainy season ends, leading to potential price stabilization.

Togo: In September, fertilizer market transactions in the southern region declined due to the end of the main planting season, a trend exacerbated by short- to medium-term droughts early in the season and an early season conclusion attributed to unusual climate changes. Conversely, the northern region experienced resumed rains following over three weeks of drought. This agro-climatic disruption resulted in low fertilizer demand, with only 346 MT of Urea and 2,401 MT of NPK sold between August and September. However, demand is expected to recover in October, driven by favorable weather forecasts and the initiation of vegetable crops in the south and irrigated areas nationwide. There is no tension on the supply side, thanks to 135,355 MT of fertilizer mobilized under a subsidy program—well above the initial plan of 85,000 MT. This total includes 83,595 MT of Urea and 51,761 MT of NPK, of which 64,213 MT were sold (18,920 MT of Urea and 45,293 MT of NPK). A surplus of 71,142 MT remains available, ensuring adequate supply for off-season needs. Fertilizers are sold at subsidized prices, which have remained unchanged for two years: CFA 18,000 (approximately $30) per 50 kg bag for Urea and NPK 15-15-15, and CFA 14,000 (about $23) for Urea and NPK 12-20-18 +5S +1B in the cotton sector.

Market prices for fertilizers varied between August and September. The price of a 50 kg bag of Urea rose slightly by 1.11%, from CFA 15,625 (US$25.87) in August to CFA 15,800 (US$30.60) in September. Meanwhile, the price of a 50 kg bag of NPK 6-20-10 dropped significantly by 19.33%, from CFA 15,000 (US$26.13) to CFA 12,050. The price of NPK 20-20-20 remained steady at CFA 45,000 (US$73.48).

Availability and Affordability: With the rainy season gradually ending and harvest season beginning in some West African countries, the demand for fertilizers has been reducing with prices somewhat stable. Fertilizers are generally available, but supply is moderate. Some countries are seeing price decreases due to reduced demand, but affordability remains a significant issue across the region, as fluctuating local currencies continue to drive up fertilizer prices.

Distribution: In September, fertilizer importation, transportation, and logistics in West Africa went smoothly with few disruptions or border restrictions. Significant quantities of fertilizers were successfully moved through entry points and distributed. In Nigeria, logistics were mostly efficient, though the Northeast region experienced transportation restrictions due to security issues. The National Port Authority (NPA) was instrumental in ensuring effective logistics and expediting clearance processes for fertilizers across West Africa, provided proper documentation was maintained.