The rising demand for diammonium phosphate (DAP), muriate of potash (MOP), and granular ammonium sulphate by blenders caused a 547 percent surge in Nigeria’s global fertiliser imports in 2020.
Data from the International Trade Centre (ITC) show that the country’s imported $250.2 million (N118bn) worth of raw materials for various fertiliser blends in 2020 from $38.7 million worth imported in 2019, reaching a 6-year high.
The recent surge in the demand for fertiliser raw materials not found locally is an indication that activities in the industry is rising strongly while creating jobs and boosting farmers’ productivity.
“The upsurge in the country’s global fertiliser imports data is for raw materials and not for blended fertilisers,” notes Gideon Negedu, executive secretary, Fertilizers Producers Suppliers Association of Nigerian (FEPSAN) in a response to questions.
“Our capacity to produce NPK in the country has increased by 400 percent and blending plants have increased to 46 currently, thus causing a surge in the demand for fertiliser raw materials we do not have locally,” Negedu says.
He notes that the country needs four constituent raw materials to produce urea and NPK, adding that the country has abundant urea and limestone granules (LSG) but had to import DAP from Morocco under negotiated discounted contracts, and MOP from Europe to blend locally to produce NPK at a reduced cost.
The industry currently imports 34 percent of its requirements to produce different fertiliser blends, he states.
Prices of fertilisers are surging in the country as the Nigerian government has ended its subsidy programme – Presidential Fertiliser Initiative – it kick-started in 2016 to revive the country’s local capacity to blend and produce the product.
Under initiative, which is a three-year programme that ran from 2016-2019, the government imported fertiliser raw materials not found locally and trucked them directly to blenders at a discounted fee.
This attracted lots of investments into the sector from fertiliser heavyweights such as Indorama, Dangote, Notore, and OCP Africa, among others, and brought down the price of NPK.
Investments into Nigeria’s fertiliser industry are estimated at $7.5 billion (N3.1trn) by FEPSAN.
Currently, the Nigerian government had fully pulled out and restructured the industry by limiting its role to only purchasing the imported raw materials in bulk on behalf of blenders while allowing market forces determine price of NPK fertilisers.
“As the government begins to loosen its interventions and withdrew subsidy to allow the market forces work, more investors are coming on board and demand has been on the rise,” Negedu states.
“The Nigeria Sovereign Investment Authority (NSIA) purchased bulk of the needed raw materials on behalf of the blenders. As of last week, we have provided a guarantee of N100 billion and cash of N30 billion paid by our members for raw materials to NSIA,” he says.
According to the PFI document, the fertiliser industry possesses a blending capacity of 4 million tons of NPK annually and 2 million tons production capacity for Urea, with the capacity to employ over 250,000 people in both direct and indirect jobs across the country.
Experts estimate the current capacity utilisation of the industry to reach 70 percent with the 46 blending plants in operations.
NPK was among the 41 items blacklisted by the Central Bank of Nigeria from access to foreign exchange.
“There are lots of investments coming into the fertiliser industry and that is what is responsible for the recent surge in imports since we still import some of the materials needed for production,” notes Abiodun Olorundenro, manager, Aquashoot Limited.
However, Olorundenro says that despite the surge in demand for raw materials by blenders, farmers still cannot get fertilisers as at when needed, noting that there has been an upsurge in the prices of NPK and Urea in the country since the virus outbreak in 2020, thus taking a toll on food prices.
“Fertiliser is almost scared in-country, especially in the south-west region. A 50kg bag of NPK now sells between N14,000 and N15,000 as against N7,000 and N7,500 last year,” he says.
AfricanFarmer Mogaji, chief executive, X-ray Consulting, says that the continuous increase in fertiliser prices will affect farmers’ productivity as many do not apply sufficient fertilisers owing to its high cost.
“The government has ended fertiliser subsidy and that is the reason why the PFI fertilisers are no longer available in markets across the country,” Mogaji states.
“At the current price of NPK it will be difficult for farmers and this will lead to another surge in food prices,” he notes.
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