Trapped vessels put Nigeria’s fertiliser production at risk

Nigeria’s fertiliser production looks set to suffer a major setback as the Russia-Ukraine war has trapped four inbound vessels containing over 70,000 metric tons of potash – a key raw material input, putting food security in Africa’s most populous nation at risk.

Nigeria imports 34 percent of the raw materials needed to produce a critical type of fertiliser called NPK, which is used by millions of smallholder farmers.

The country gets all its diammonium phosphate (DAP) from Morocco, muriate of potash from Russia, and granular ammonium sulphate from China. All three raw materials are used to produce NPK.

While Nigeria imports the raw materials for the production of NPK, it is rich in urea – another blend of fertiliser.

Before Russia’s invasion of Ukraine, the Nigeria Sovereign Investment Authority (NSIA) had placed an order for about 90,000 tons of potash from Russia.

“Of the five vessels containing potash which we ordered from Russia, we only managed to get one while the remaining four are trapped due to the war,” said an industry source who did not want to be named as the information was not yet made public.

“We won’t have enough potash to last us all through the current wet farming season, and this means prices of fertiliser and food will further surge,” he said.

Industry players say this means Nigeria does not currently have the volume of potash it requires to produce NPK throughout the current wet farming season, putting the country’s food security at risk.

The NSIA, however, insists that there is no cause for alarm.

“We have advanced conversations with many other suppliers; between now and the end of May, fresh vessels will arrive,” Uche Orji, chief executive officer of NSIA, said in an interview with BusinessDay.

“We will not feel the impact of any shortage until fresh vessels start to arrive…But the big issue is the price of new raw materials,” he said.

A surge in food prices will pile more pressure on Nigerians who are already contending with rising inflation amid a nearly three-fold jump in energy costs. In February, the National Bureau of Statistics reported that inflation hit 15.7 percent, with core inflation accelerating at the fastest pace in four years. Food inflation stood at 17.11 percent, with analysts expecting more acceleration in March as the surge in energy costs becomes more reflective.

Another industry source, who confirmed that Nigeria has four stranded vessels in Russia, said the government is now in the market looking for sellers that can supply enough potash to meet the shortfall.

“They (the government) are going all over the world looking at the spot market, and I am hearing they may be able to get something from Canada,” the source, who said talks were still private, said.

But there will be stiff competition from other countries also looking to import potash, according to the source. “Everybody is looking for this (potash), and some people are better endowed than others,” he added.

Potash is vital to many important plant processes, including photosynthesis, water and nutrient uptake, and overall crop quality.

Read also: Demand for raw materials pushes Nigeria’s fertiliser imports up 547%

“Potash is an important element in the plant in the process for which they store carbohydrates. There are fertilisers without potash but this can only be applied in areas where there is sufficient potash for the plant,” said Kola Adebayo, a professor at the department of agric extension and development, Federal University of Agriculture, Abeokuta.

“But all root and tuber crops, maize, and other plants that store carbohydrates require a huge volume of potash to grow well,” he said.

Since Russia invaded Ukraine in February, prices of fertiliser have been climbing rapidly as the war created a supply shock. Despite this, the Moroccan government has, however, honoured the concession agreement it had with Nigeria in 2021.

Morocco entered into a fertiliser deal with Nigeria in 2016 to supply DAP at a discounted commercial price, considered necessary to help the country grow its local fertiliser industry.

After the initial agreement ended, the Nigerian government entered into another agreement with Morocco for two years that allows Moroccan state-owned fertiliser producer, OCP, the NSIA, and state-owned Nigerian National Petroleum Company, to import phosphate from Morocco on behalf of blenders while producing ammonia to export to Morocco.

In 2021, the government restructured the Presidential Fertiliser Initiative by pulling out and limiting its role to only bulk-buying of the raw materials on behalf of blenders. The NSIA also entered into another agreement to bulk-buy on behalf of blenders.

“We would have been in a dire situation now if not for the fertiliser deal with Morocco,” Gideon Negedu, executive secretary of Fertilizers Producers Suppliers Association of Nigeria, said in a response to questions.

“They have kept to the discounted arrangement they signed despite surging prices but the situation is more critical in other African countries since the shortage of fertiliser supply due to the Russia-Ukraine crisis,” he said.

Nigerian farmers are facing surging prices for fertiliser, animal feed, pesticides, seeds, and seedlings, coupled with the worsening insecurity in the country and rising diesel prices that have shut transportation costs, causing fear of imminent food scarcity if nothing is done to address the issues.

In 2021, the country imported 175,133 metric tonnes (MT) of potash from Russia, 292,158 MT of phosphate from Morocco and 238,158 MT of ammonium sulphate from China, according to data from the International Fertilizer Development Centre.

Aliko Dangote, chairman and chief executive of Dangote Group, had in early March said the country should expect food shortages three months from then as the adverse consequence of the Russian-Ukraine war impacts fertiliser supply.

“Not only wheat or maize will be affected but a lot of components, because as we speak, potash and urea supply are held largely by Russia and Ukraine,” Dangote said at the 4th annual food processing and nutrition leadership forum in Lagos.

“There will be a scarcity of food because people will not be able to access fertilisers going forward. But we may not see the effects now but in the next two to three months, it will reflect,” he added.

On the African continent, the effect of the crisis is already felt in the prices of bread and other wheat derivatives as well as maize.

Ambassador Cindy McCain, permanent representative to the United Nations Food and Agricultural Agencies in Rome, said last week at a press briefing that Africa’s food security was threatened by the war.

She said the war was already causing a shortfall in food supply, adding that African leaders needed to increase food production.

“There are going to be some tough choices to be made by African countries,” McCain said. “It is about increasing productivity, getting more land per hectare for smallholder farmers that dominate the agricultural sector across the continent.”