Small-scale farmers will enjoy a Sh1,000 rebate per bag of fertiliser during this planting season under a subsidy meant to boost food security and cushion growers against high international prices.
The low prices, however, will only be secured through the National Cereals and Produce Board, the only agency allowed to distribute the fertiliser under a Sh4.3 billion scheme.
With the subsidy, di-ammonium phosphate (DAP) or planting fertiliser, and top dresser NPK will each cost Sh2,500 for a 50-kg bag while CAN — a top dresser for cereals, and UREA, will cost Sh1,600 per bag, the Agriculture ministry said in a notice published on Monday.
Kenyan farmers on average use 4.5 kilogrammes of fertiliser per acre compared to a global average of 12 kilogrammes per acre, including in Egypt, South Africa and Morocco, the continent’s biggest consumers of land fertility inputs.
Fertiliser Association of Kenya (FAT), a lobby for importers, however warned that they risk running out of business because of the subsidy which has given the government control of 22 per cent of the market.
“The commercial prices for landed DAP in Mombasa is Sh3,000 and Sh1,800 for CAN,” FAT chairman Eustace Muriuki said by telephone.
Port and handling charges account for $65 (Sh5,100) per tonne, before distributors add their margins.
In recent weeks, the price of standard crude oil, a major component in fertiliser making, has risen to $108 per barrel on the back of the turmoil in the Arab world.
The Food and Agriculture Organisation’s (FAO) 2011forecast shows that demand, economic context, crude oil prices, trade, freight rates, exchange rates and the environment are some of the factors affecting fertiliser prices.
While Kenya is making attempts to address fertiliser policies in line with the 2006 Abuja Africa Fertilizer Summit, FAO recommends that such subsidies be scaled up to cover a large network of farmers.
“The sustainability of policies applied in some countries including tariff adjustments and fertiliser subsidies, needs to be demonstrated at a larger scale,” notes the report.
Africa will account for less than three per cent of world fertiliser consumption during the outlook period.
Nitrogen consumption is forecast to grow at 2.9 per cent, and phosphate and potash by one per cent and two per cent respectively.
“Africa will remain a major phosphate exporter and increase nitrogen exports while importing all of its potash,” says the report.