13 October 2017

Zimbabwe: Zim Fertiliser Crisis Looms

Photo: Irin News
(File photo).

Zimbabwe is facing a serious fertiliser shortage, amid revelations that an additional US$60 million is required for importation of raw materials to manufacture adequate stocks outside the US$56 million the country recently secured through an arrangement with the African Import and Export Bank (Afreximbank), an industry representative has revealed.

Last week, the Reserve Bank of Zimbabwe announced that it had negotiated for a US$156 million loan facility with Afreximbank to import fertiliser among other key commodities before this summer cropping season gathers momentum. But the Afreximbank support facility is not adequate to meet local fertiliser demand.

Battling an acute foreign currency shortage and mounting economic challenges, the country has perennially struggled to mobilise sufficient financial resources for importation of adequate fertiliser for its farmers.

Zimbabwe requires an estimated 400 000 tonnes of fertiliser for a successful summer cropping season.

Zimbabwe Fertiliser Manufacturers' Association chairperson Alvin Mashingaidze said, as a production cost-cutting measure, and in light of the prevailing liquidity crunch, the industry would import raw materials and manufacture locally.

The association is constituted by firms such as Windmill, Zimbabwe Fertiliser Company, Omnia and Sable Chemical.

Most of the companies are struggling to mobilise sufficient foreign currency required to import raw materials.

"The truth is that we are not getting enough foreign currency to import raw materials. For the production of 400 000 tonnes, the country requires about US$120 million. So, we still require US$60 million to meet that demand," he said, noting that the industry was targeting to mobilise the outstanding resources within the next month to avert fertiliser shortages.

The fertiliser industry, Mashingaidze said, was sitting on stocks estimated at about 100 000 tonnes. "At the moment the industry is sitting on 100 000 tonnes of fertiliser. An additional 100 000 tonnes has been distributed in the market already," he said.

"We only have about a month to mobilise resources to meet fertiliser demand through the importation of raw materials."

Over the last nine months, Mashingaidze said fertiliser manufacturing firms had significantly increased their production capacity by setting up new blending plants.

In the last two years, fresh capital investments have been made into additional blending plants which have increased Zimbabwe's capacity to manufacture fertilisers to about 1,2 million tonnes, depending on the availability of raw materials.

However, fears are mounting that without the much-needed raw materials, the blending plants would turn into white elephants.

"Most companies have set up several blending plants to increase production of NPK and basal fertiliser demand. All you need are the raw materials," Mashingaidze said.

As part of preparations for this summer cropping season, the central bank has been allocating foreign currency to fertiliser manufacturing firms for the importation of raw materials.

Zimbabwe Farmers' Union executive director Paul Zakariya also expressed fears that the country could face fertiliser shortages, derailing the success of the summer cropping season.

He, however, said seed manufacturing companies had sufficient stocks to meet demand. "In terms of seed, the companies have adequate seed to meet demand. They have more than enough. The only hitch will be on fertilisers, even last year we had some challenges with top dressing fertilisers around December," Mashingaidze said.

"It is on the top dressing that we have a problem."

Over the years, Zimbabwe's crop output has sharply declined due to fertiliser shortages, among other challenges.

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