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The upsurge in fertiliser prices has continued
unabated with prices of urea, one variety of
fertiliser, reaching a record high 512 dollars per
tonne last week, jeopardising government plans to
rev up production of crops for bio-fuels.
In a government tender opened on Thursday December
13, which attracted offers from Agricultural Input
Supplies Enterprise (AISE), Lome Adama, Wedera and
Enderta farmers cooperative unions, the lowest offer
for the sale of urea was 497 dollars per tonne. An
earlier urea tender, which attracted only AISE, was
cancelled on the ground that the enterprise's tender
document was not adequate.
It is the first time for prices of urea to jump
above 400 dollars. At the beginning of this year,
the Department of Agricultural Input Marketing
Development (AIMD) under the Ministry of Agriculture
and Rural Development (MoARD) started issuing
tenders for the procurement of 530,000 metric tonnes
of fertiliser, of which 350,000 metric tonne is DAP,
a phosphate-based fertiliser, and the remaining is
urea, which is made up mostly of nitrate.
With each tender, the department purchases 75,000tn
of fertiliser, and each supplier competes to supply
a third of the total.
Therefore, of the four cooperative unions that
participated in the latest tender, one will be
dropped while three will win.
Fertiliser prices have become major sources of
concern for the government this year.
"We are concerned not only about the prices, but we
also have concerns over the sustainability of the
supply," an official at the Department of AIMD told
Fortune.
The price increase in DAP fertiliser is even steeper
than the increase in urea. In a tender opened in
December 4, 2007, the minimum offer for a tonne of
DAP was 689.2 dollars while the highest was 761
dollars.
The government has allocated a maximum of 300 mln
dollars this year for fertiliser procurement, a 100
mln dollars higher than last year's budget.
"No matter how high prices are rising, the budget
will be allocated for the procurement because
farmers have to get it when they need it," an
official at the Ministry of Finance and Economic
Development (MoFED), told Fortune.
According to an expert, the price hike is mainly
attributed to three factors: a shortage of
fertiliser inputs like potash and phosphorous, a
rise in international oil prices and the subsequent
growth of the cultivation of Castor Seed, Jatropha
and Palm tree to switch to bio-fuel.
Europe and the United States have already begun
cultivating these plants, which according to the
expert require extensive use of fertiliser. The
farmers in these countries are unresponsive to
fertiliser price hikes as they receive huge amounts
of subsidies from their respective governments. The
suppliers, therefore, are not interested to supply
fertiliser to developing countries, leaving Ethiopia
in its current dilemma.
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