Fertilizer Supply Stalls As Macro Committee Dallies In Determining Prices

4mln tons of last year’s fertilizer remains in EABC warehouses

Dalliance in setting prices for fertilizer are forcing farmers to delay sowing their crops, raising concerns about lower yields from the Belgian cultivation season.

Members of the Macroeconomic Committee, which includes the central bank governor and minister of Finance, have yet to set the rate farmers will pay for the fertilizer they need for the secondary rainy season lasting from February to April, which often sees the cultivation of short-cycle crops like wheat and barley in many parts of the country.

The issue was at the top of the agenda when officials of the Ministry of Agriculture presented a half-year report to Parliament’s Agricultural Affairs Committee on Friday.

Committee chair Solomon Lale stated that although fertilizer is making its way into the country, distribution to farmers has yet to begin.

“Distribution and sale to farmers has not started because a price has yet to be determined. The season is passing; prices must be determined and sales started immediately,” said Solomon. “So far, farmers are being forced to buy fertilizer that has rolled down from last year. The macroeconomic committee must determine fertilizer pricing for the Belgian season.”

The committee, which reports to the Prime Minister, is tasked with determining fertilizer subsidy rates, while the state-owned Ethiopian Agricultural Businesses Corporation (EABC) is responsible for procuring, from abroad, the vast majority of the fertilizer used on Ethiopian farms.

The federal government spends around USD one billion each year on fertilizer imports, selling the commodity to farmers at heavily subsidized prices. However, these subsidies will likely be slashed as part of the ongoing IMF-led economic reforms.

The IMF document outlining the details of Ethiopia’s Extended Credit Facility (ECF) program and published last July hints the country’s fertilizer subsidies will “need to be unwound gradually over time.”

Solomon noted that while fertilizer imported for the Belgian season has already begun arriving in regions like Sidama, Oromia, and Amhara, other parts of the country, including the Southern and Central Ethiopia regions, have not received any shipments.

“There are serious arguments because these two regional states did not repay loans they took to buy fertilizer. This issue should be resolved as soon as possible,” said the MP.

Ministry officials told lawmakers that fertilizer import volumes have jumped by 50 percent year-on-year, but said the distribution process has been affected by “various factors.”

The federal government targets the import of 3.9 million metric tons of fertilizer this year, allocating USD 1.2 billion to foot the massive bill.

As of last week, 1.4 million metric tons had been procured, with more than half already in Ethiopia or in Djibouti, according to Ministry officials.

Nonetheless, sales to farmers have not yet begun, according to Sofia Kassa (PhD), a state minister of Agriculture.

“This year, fertilizer import volumes grew and the fertilizer also began arriving earlier. However, we could not unload and stock the fertilizer due to the lack of warehouses in the regions,” said Sofia. “We are pushing regions to construct more warehouses.”

Another topic of discussion during Friday’s presentation was the EABC, which was implicated in a massive corruption scandal involving fertilizer last year.

“EABC was a national reserve. It used to buy and import fertilizer, based on orders from the Ministry of Agriculture. But the illegal fertilizer business was growing. This year, we directed all large-scale farms to access fertilizer from their respective regions,” said Sofia.

She told MPs that over 1.4 million metric tons of fertilizer from last year’s stock remain in EABC warehouses.

“This fertilizer must be sold. The stock at EABC must be sold as fast as possible, before this cultivation season passes,” Sofia said.

Last November, federal police took dozens of senior EABC managers into custody, including CEO Kifle Woldemariam. Yeshimebet Negash, who replaced Kifle at the helm, is now tasked with overseeing an organizational overhaul at the Corporation.