Fertiliser prices spike after Russia-Ukraine warWednesday March 02 2022
Fertiliser prices in Kenya are set to skyrocket above Sh7,000 for a 50 kilo bag on fears that Russia’s invasion of Ukraine will curtail global supplies.
Agriculture Cabinet Secretary Peter Munya on Tuesday told Parliament that the cost of the farm input could rise unless it was subsidised for farmers.
“We get most of our fertiliser from Russia and China and this war may see the price of fertiliser hit Sh7,000 if there will be no subsidy in place,” said Mr Munya.
Russia was the world’s largest exporter of nitrogen products or planting fertliser in 2021.
The risk of disruption to shipments comes as fertiliser costs have already been soaring because of the high prices of natural gas in Europe, which forced some plants to halt or curtail production.
In Kenya, the cost of fertiliser has increased to Sh6,000 from a low of Sh4,000 last year, a blow to farmers who are preparing for the planting season that kicks off this month.
Those higher costs could therefore be passed onto customers through higher food prices.
The spike in prices could also see farmers avoid using fertiliser, hurting production, triggering hunger and reducing earnings in a country where farming accounts for a third of the annual economic output.
Parliament on Tuesday said it would factor in Sh3 billion in the supplementary budget for the financial year ending June to address the current high cost of fertiliser.
Mr Munya had told a parliamentary committee that the Ministry of Agriculture needed at least Sh31.8 billion to effectively offer the subsidy to farmers.
He added that should the ministry receive Sh31 billion, the price of the planting fertiliser (Diamonium Phosphate) would drop to Sh2,800.
The high cost of fertiliser is likely to compromise maize production this year, adding pressure on food security, given that Kenya is a maize-deficit country and relies on cross-border imports to meet the annual demand.
The low yields in the country have always been blamed on poor usage of fertiliser as some of the growers opt to grow their maize without the manure due to high costs.
Under a subsidy programme, the government normally pays half of the cost of fertiliser for farmers, enabling them to buy the farm input at 50 percent less.
With Sh3 billion, the ministry can purchase half a million 50kg bags at the current price of Sh6,000 per bag.
Last month, Mr Munya said he had prepared a Cabinet memo to discuss the high cost of fertilizer that has caused an uproar among farmers.
Fertiliser for maize farmers was not included in the current budget. Coffee and tea received Sh1 billion each, with sugar getting Sh1.5 billion.
Parliament directed Mr Munya to present to the committee a workable budget that can be used to lower the prices of fertiliser before the tabling of the supplementary budget.
The Cabinet Secretary undertook to give a response before the close of business Tuesday.
The government stopped fertiliser subsidies issued through the National Cereals and Produce Board three years ago and instead introduced an e-voucher programme that targets a small section of farmers, mainly the small-scale holders.
The high cost of fertiliser, which is a global problem, has also been occasioned by a slowdown in production by China when Covid-19 struck, cutting down supply significantly.
The Russia-Ukraine war has led to analysts warning grain production could be hampered, causing global wheat prices to double, which could have knock-on effects across the world as supplies struggle to keep up with demand.
Both Russia and Ukraine have at times been dubbed “the breadbasket of Europe”, exporting about a quarter of the world’s wheat and half of its sunflower products, such as seeds and oil.
More than 40 percent of Ukraine’s wheat and corn exports went to the Middle East or Africa, including Kenya last year, and disruptions to supply could affect availability in these areas.
Kenya imports 75 percent of its wheat needs.