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An unusual dialogue loomed over the latest 75,000tn
Dap fertiliser procurement tender, which opened on
December 4, 2007. As the price of fertiliser
steadily increased in the world market since October
2007, discussions between farmers from various
unions like Itosa, Ambo, and Damota-Welayta as well
members of the tender committee and representatives
from the two major fertiliser companies set the
former Bunana Shay building ablaze last week.
Demere Demissie,
general manager of Lome-Adama Cooperatives Union,
was taken aback by the stark price increases in
fertiliser especially since Yara and Amropa have
continued to be the sole suppliers of fertiliser in
Ethiopia. According to Demissie, there is no spirit
of competition in the fertiliser market in Ethiopia.
The German-based company Amropa and French-based
company Yara became the sole suppliers of the
25,000tn Dap fertiliser procurement for the fifth
time by the three cooperative unions. Yara offered
761 dollars per ton for the supply of 25,000tn for
Itosa farmers’ cooperative union, while Amropa
offered 689.27 dollars to Ambo and 699.13 per ton to
Damota-Welayta Cooperative Unions.
“We need fertiliser to meet the demand, but the hike
in prices is putting us in trouble,” said a member
of the National Procurement Committee. “The price of
fertiliser has been observed to hike ranging from 30
to 50 dollars per ton on average with the passage of
every single month”.
At the beginning of the year, the department of
Agriculture Inputs Marketing Development under the
Ministry of Agriculture and Rural Development (MoARD)
started floating the 530,000 metric tons of
fertiliser supply tenders, of which 350,000tn is
Dap. The size of the procurement increased this year
due to a lack of stock from the previous year.
During the last fiscal year, the country required
650,000tns of fertiliser. However, since there were
about 145,000tns left over from the previous
procurement, a tender was floated for only 505,000
metric tonnes but this amount was not obtained owing
to the fertiliser prices, leaving no stocks for the
current year.
Alarmed by the prevailing circumstances, the country
reserved 100 million dollars more in the current
budget than last year’s, in which it spent between
180 and 200 million dollars for fertiliser
procurement. In the current year, Ethiopia has
allocated between 250 and 300 million dollars to the
budget.
Demere has casted
doubted over the growing cost of fertiliser, whereby
most farmers in Ethiopia is unable to afford
purchasing fertiliser at the current price. Hence,
it is advisable the government should intervene to
address this pressing issue.
Due to the lack of alternative suppliers, fertiliser
is currently unaffordable. From the experience of
the last five tenders, it is an important lesson
that there needs to be initiative to search for more
affordable prices for fertiliser in the global
market, one farmer bemoaned.
Nevertheless, representative of one of the suppliers
is of the opinion that the growing demand for
fertiliser by farmers in many parts of the world has
been the main reason for the price hike.
Two of the most populous nations in the world, China
and India, currently demand large volumes of
fertliser. Yet, farmers from two of the most
advanced economies in the world, the United Sates of
America and the European Union, have been
continually subsidized by their respective
governments increasing their purchasing power, an
expert told Fortune.
The Ethiopian government may need to request some
form of support from international sources, said the
representative. Although there are over 60 know
major suppliers of fertiliser in the world, only
Yara and Amropa demonstrated interest in supplying
the Ethiopian market and continuing to dominate the
market over the years.
An expert explained that due to the bio-fuel market,
farmers throughout the world are more inclined to
produce corn. Consequently, the price of corn in the
world market has spiked with no sign of declining in
the foreseeable future. Farmers, therefore, require
more fertiliser to produce a sufficient amount corn
as a result of the increased price of fertiliser,
the expert added.
Apart from the shortage of raw material such as
phosphorous and potash which pushed up prices of
fertiliser, oil prices which currently stand at 99
dollars per barrel is another key reason for the
elevated price of fertiliser.
Although the National Fertiliser Procurement
Committee remained relatively poised and at ease
throughout the course of the discussion, the
participants that were generally astounded by these
changes urged the Committee to take their concerns
to senior government officials.
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