State changes tune on Eldoret fertiliser plant price reduction

The construction of a Sh2 billion fertiliser plant in Eldoret will not lower the cost of manure, Agriculture secretary Willy Bett told MPs on Wednesday.

Mr Bett reckons that the plant will be blending imported fertiliser to suit local soil and crops requirements, denying its operators cost savings that would lower manure costs.

This will dim the hopes of farmers who were betting on the Eldoret plant to cut fertiliser prices and lower production costs.

Farming accounts for a quarter of Kenya’s annual economic output, but the high cost of fertilisers means farmers rely on subsidies or avoid using them, which hurts output.

“The Eldoret factory will help in the availability of fertiliser but in terms of prices, we still have to subsidies. For those who will miss out on the government subsidy, then they will pay the commercial prices to get the commodity,” Mr Bett told the National Assembly Agriculture committee.

The government had estimated that the Eldoret plant would cut costs of fertiliser by about 40 per cent, or less than Sh2, 000 per 90 kilogramme bag, saving the government money spent on subsidies.

Toyota Tsusho owns the Eldoret blending plant.

Deputy President William Ruto in May said Kenya would no longer import fertiliser by the end of the year once Eldoret plant starts operations.
The government spends up to Sh3 billion annually to provide farmers with low cost imported fertiliser.

The Deputy President added that the completion of the factory would also bring down the cost of production.

Kenya has been encouraging local production and blending of fertilisers to help cut import costs and reduce subsidies needed to make fertilisers affordable for poor farmers.

READ: Eldoret fertiliser factory plans August production

Mr Bett reckons that Kenya will benefit from cheaper fertiliser once the Eldoret plant is upgraded to a manufacturing plant in the second phase of its construction at a cost of Sh123 billion.

He said the Eldoret plant would not have any impact on prices of the fertiliser since “every component is being imported.”

“The next step now is to manufacture fertiliser,” Mr Bett said earlier, adding production of fertilisers could start in 2020 once the country starts production of hydrocarbons.

Kenya is seeking to develop oil reserves found in recent years, and the minister also pointed to some gas finds.

Ammonia for fertilisers can be produced from hydrocarbon feedstocks, such as natural gas and oil.

Kenya has for long had plans to put up a fertiliser plant to cut prices of the input, which inflates food prices.

In 1975, the government had picked KenRen, an American firm to manufacture fertiliser for domestic and export markets.

The deal cost taxpayers tens of millions of shillings but never materialised.