Nigeria’s 2021 fertiliser imports surge 65%

Nigeria, Africa’s most populous country, saw its fertiliser imports surge by 65 percent in 2021 as demand for the commodity rose.

Data from the International Fertilizer Development Centre show that the country imported 706,922 metric tons (MT) of fertiliser in 2021, up from the 429,303 MT imported in 2020, mainly diammonium phosphate (DAP), muriate of potash (MOP), and granular ammonium sulphate.

The recent surge in the demand for fertiliser raw materials not found locally in the country is an indication that activities in the industry are rising strongly to disrupt the status quo of the importation of blended fertiliser while creating jobs and boosting farmers’ productivity.

Currently, the capacity utilisation of the industry is estimated to reach 80 percent, with 52 blending plants in operation in 2021.

“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,” said Abiodun Olorundenro, operations manager at Aquashoot Limited.

Nigeria needs four constituent raw materials to produce urea and NPK. It has abundant urea and limestone granules but needs to import DAP, MOP and granular ammonium to produce various NPK blends.

To ensure a constant supply of DAP, Nigeria unveiled the Presidential Fertiliser Initiative in 2016 to revive the country’s local capacity to blend and produce fertilisers.

Under the initiative, the government imports DAP at a discounted commercial price and trucks them directly to blenders to blend for them at a discounted fee.

This has attracted lots of investments into the sector from fertiliser heavyweights such as Indorama, Dangote, Notore, and OCP Africa. Investments into the Nigerian fertiliser industry are estimated at $7.5 billion (N3.2 trillion) by Fertilizer Producers & Suppliers Association of Nigeria (FEPSAN).

The Nigerian government has fully pulled out and restructured the industry by limiting its role to only purchasing the imported raw materials in bulk on behalf of the blender to allow market forces to run the industry.

The industry has come under pressure since the Russian invasion of Ukraine in February. The price of Automotive Gas Oil, popularly known as diesel, used to power their blending plants, has soared by almost 170 percent in one year to N700-750 per litre from N220-N240 in March last year.

The surge in the price of diesel, which has been deregulated, followed the rally in global oil prices, buoyed by the Russia-Ukraine crisis. Brent, the global oil benchmark, sold for $106 per barrel at the time of writing.

Read also: Fertiliser prices double in threat to Nigeria’s food security

This is coupled with the shortfall in the supply of potash, a key raw material in producing various NPK blends, as the war has caused a shock in the global commodity market and cut off shipments from the Black Sea region.

Four Nigeria-bound vessels with over 70,000 tons of potash have been trapped in the Black Sea region. This has caused the prices of NPK to surge by 130 percent since the wet farming season started.

Russia is the world’s largest exporter of fertiliser, accounting for 23 percent of ammonia, 14 percent of urea, 10 percent of processed phosphate, and 21 percent of potash exports, according to data from the Fertilizer Institute.

An industry source who does not want his name in print told BusinessDay that FEPSAN visited the president recently, is hoping to access raw materials with the promise that it will not affect their production, which may not be feasible due to other factors.

According to the source, if the shortage of potash persists, some companies may be forced to either suspend the production of fertiliser or reduce the quota produced to cut their energy costs while the distribution of fertiliser will be significantly impacted, especially with rising cases of insecurity in the North where food items are predominantly grown.