Eastern Africa countries are working to harmonize the region’s fertilizer market, a move that could improve not only demand for the farm inputs but also production, supply, and distribution that lead to better yields.
Although countries such as Kenya, Ethiopia, and Uganda are fine-tuning their respective draft policies on fertilizer, a team made up of representatives from East African Community (EAC) Partner States is also working on a joint fertilizer policy to govern the regional market that is currently dominated by Ethiopia, Kenya, and Tanzania. Those countries have a market size of 789,250 metric tons, 563,362 mt, and 246,754 mt respectively, according to figures by the African Fertilizer and Agribusiness Partnership (AFAP).
The EAC fertilizer draft policy, when approved, is expected to address issues such as taxation, subsidies, farm input support, liberalization of the market and the role of the private sector, access to credit, and the import and storage of large volumes of fertilizers for distribution to farmers.
In addition, the EAC Partner States — Kenya, Tanzania, Uganda, Rwanda, Burundi, and South Sudan — have proposed the establishment of the Fertilizer Management Authority to coordinate the market and ensure fair play and fertilizer quality controls according to a previous statement by the Arusha, Tanzania-based regional organization.
Currently, each country, despite the huge strides towards economic integration, have different fertilizer acts and laws that govern the marketing, distribution, storage, and pricing of farm inputs.
In addition, the EAC partner states hope to have common fertilizer standards spelling out fertilizer grades, mark labeling, fertilizer classification, packaging, content formulation, handling, and storage.
The push for a harmonized Eastern Africa fertilizer market comes at a time when governments in the region, in partnership with the private sector, are coming up with strategies to increase fertilizer usage, ensure the farm input is accessible at an affordable cost for increased farm yields and improved farm earnings, especially for small-scale farmers.
Other sub-Saharan fertilizer markets could impact the Eastern Africa market because of the cross-cutting regional economic integration initiatives such as the Common Market for Eastern and Southern Africa (Comesa). Those countries include South Africa with an estimated market size of 1,814,369 metric tons, Nigeria (907,185), Zambia (397,346), Zimbabwe (369,224), and Malawi (308,142).
“In sub-Saharan Africa markets, adoption and consumption of fertilizers by country is complex and driven by a range of issues, including shallow markets/poor market linkages, poor distribution, small farm sizes and poorly targeted interventions,” says Pierre Brunache, Jr., Chief Agribusiness Officer, AFAP.
Despite challenges facing the Eastern Africa fertilizer market, production is expected to surge with the recent opening of a blending plant in Kenya by Toyota Tsusho Fertilizer Africa Limited, a wholly owned subsidiary of Japan’s Toyota Tsusho Corp. with capacity of 150,000 tons/year at peak operation.
The project, which was developed with the support of AFAP, International Fertilizer Development Center and the Eldoret-based Moi University, is expected to reduce Kenya’s 600,000 tons of fertilizer imports and overall cost of the product.
In Eastern Africa, only Minjingu Mines & Fertilizer Ltd in Tanzania, which has a granulizer plant for converting heneficiated rock phosphate into 30,000 tons of ready-to-use fertilizer every year, is the only manufacturer that utilizes locally generated raw material.
But a number of other projects are under consideration including NPK plant in Ethiopia, Urea Plants in Tanzania and Mozambique, and a Single Super Phosphate Triple Super Phosphate plant in Uganda.
“Each country has a different fertilizer market structure that has grown from their respective history and governance,” said Brunache. “For example, centralized governments like Ethiopia, control most of the fertilizer activities, from purchase to distribution and research and extension.”
Kenya is one of the open fertilizer markets in Eastern Africa where “the market has been characterized by importers, dealing directly with international traders or manufacturers and arranging the importation of commodity products,” according to Brunache.
“Historically the African (except South Africa) fertilizer market has been a commodity market with limited investments,” says Brunache.
However, there have been many exciting dynamics playing out in the Africa fertilizer market recently that promise to trigger change for the benefit of farmers, suppliers and even producers.
First, Brunache says there is now “an appreciation that a more balanced approach to fertilization is needed in order to improve the return on investment of farmers.”
He said a recent survey in Ethiopia showed that yield increments of between 20% to 30% were realized when nutrient deficiencies are corrected, mainly with trace elements.
Secondly, the current fertilizer oversupply at the global level is forcing multinationals “to play a larger role in fertilizer development in the last continental market (Africa) that is undeveloped and continues to have food security issues.”
Thirdly, as countries in the region grow their economies and demand for fertilizers grow either for import substitution of food crops or for export crops, the interest in domestic manufacture of fertilizers will grow, according to Brunache.
“These changes demand an understanding of issues of products, business and investment, which are all challenges as markets grow in their efficiency and competitiveness,” he said.
Currently, inorganic fertilizers play a significant role and dominate the region’s market, according to AFAP’s Paul Makepeace.
“Organic fertilizers are widely used where available and are not used for alternative needs,” he said, adding that these fertilizers have smaller volume of nutrients needed for crops compared to inorganic ones.
“But there are currently not enough nutrients, in terms of volume and nutrient density, to replace the amount removed from fields for other needs such as fire, cattle feed and roofing,” he said.
Although each country in Eastern Africa has a unique supply chain structure, organizations such as AFAP are supporting initiatives that could help bridge the gap between the public and private sector for improved supply and distribution of fertilizer.
AFAP, according to Makepeace, “understands the fertilizer sector well and can effectively contribute to the structuring of fertilizer related policy and regulatory issues that ensure efficient delivery of policy.”
“This can happen at a manufacturing level, encouraging the development of better products, better supply options, partnership options, agronomic support that improves farmer return on investment,” he said.
AFAP is providing financial and technical support for various fertilizer uptake initiatives such as the “Hub and Spoke” distribution models. Under this arrangement, the regional agro-dealers “hub” are picked and facilitated to set up local storage capacity. They are then linked to smaller agro-dealers or “spoke” to ease access to fertilizers by small-scale farmers.
The agro-dealers are involved in identifying potential markets for the farm produce before the planting season and provide extension services to the farmers to ensure increased production, through effective application of fertilizer and practicing recommended agricultural practices learned through farm demonstrations.
“At harvest time, the market-driven agro-dealers assist the farmers with handling and storage, hence acting not only as input suppliers during the pre-production period, but also as output aggregator, utilizing their warehouse storage at post-harvest level,” said Makepeace.
Despite the progress made in ensuring access and effective use of fertilizer in Eastern Africa, and ongoing market harmonization efforts by governments in the region, in partnership with the private sector, should give priority to immediate challenges such as access to affordable credit, transport bottlenecks, farmer training, affordability and timely availability of fertilizer.