Fertiliser prices pose a challenge to agriculture, says Rupiah

Fertiliser prices pose a challenge to agriculture, says Rupiah
By Joan Chirwa
Saturday August 02, 2008 [04:01]

THE recent surge in fertiliser prices is posing a serious challenge to agricultural production in Zambia, Vice-President Rupiah Banda has said. And Africa Development Bank (AfDB) Group president Donald Kaberuka said the bank would increase its support towards agricultural development in view of rising costs of farming inputs. Meanwhile, Dr Kaberuka expressed doubt that oil prices will tumble below US$100 per barrel in the short term.

Speaking when Dr Kaberuka paid a courtesy call on him yesterday, Vice-President Banda said peasant and small-scale farmers in the country would feel the pinch of soaring prices of fertiliser.

“Agricultural production needs to be expanded, but the recent surge in fertiliser prices pose serious challenges to agricultural production, especially the peasant farmers,’ Vice-President Banda said. “Government will work closely with other stakeholders in addressing existing challenges in the agriculture sector in order to improve food production.”

Fertiliser prices have reached an all-time high of US$1,500 per tonne level, raising questions on whether Zambia’s small-scale farmers will afford the commodity the next farming season.

The current trading price of fertiliser represents a 300 per cent increase over last seasons’ figure of US$500, on the back of rising oil prices on the international market and increasing demand of the commodity by agricultural producing countries worldwide.

Converted at the current exchange rate, a tonne of fertiliser in kwacha terms is now costing around K4.9 million. This means a 50 kilogramme bag of the commodity could even cost around K200,000.

Industry analysts have suggested that the cause of the current high prices results from the increasing demand due to high food prices, which has been exacerbated by the current biofuel situation. Furthermore, China recently imposed an export tariff of between 100 per cent and 135 per cent on all fertilisers, which effectively took 2.4 million tonnes of urea out of the world market.

Stakeholders feel revamping operations of the Nitrogen Chemicals of Zambia (NCZ) could offer a long term solution to rising prices of fertiliser as the factory had the capacity to produce 300,000 tonnes against local demand of around 150,000 tonnes.
And Dr Kaberuka pledged the bank’s continued support towards agricultural development in Zambia.

“Prices of fertilizer have gone through the roof. They were less than US$500 last year and now they are nearing US$1,800 per tonne,” Dr Kaberuka said. “We are keen to support countries like Zambia so that farmers can have access to fertiliser.

I am particularly impressed with efforts going into maize production in Zambia, providing a sound beginning to food security in the country. The bank has committed an additional US $1 billion to support agriculture in member countries in Africa, increasing the total intervention for the food crisis to US $4.8 billion.”

Meanwhile, the Zambian government and AfDB have signed a US $500,000 about K1.7 billion emergency relief as an intervention for flood and drought victims.

Finance and national planning minister Ng’andu Magande, who signed on behalf of the Zambian government, said the government was impressed with the support coming from the AfDB, an institution that played a critical role in writing off Zambia’s external debt through the HIPC and Multi-lateral Debt Relief Initiative (MDRI).

And Dr Kaberuka suggested that oil-importing countries like Zambia should turn to alternative sources of energy to counter rising prices of crude oil.

“With the evolution in oil prices, it is very unlikely that prices will fall below US $100 per barrel in the near future,” said Dr Kaberuka. “It is therefore not possible for African countries to continue relying on crude oil but should turn to other sources of energy.”