Intrigues over scarcity of urea fertiliser

Major farm input dealers have said Nigeria is running out of granular Urea fertiliser as stock shrinks. This has caused major concern in the sector as prices are likely to further escalate. The National Agro Inputs Dealers Association (NAIDA) lamented that supply from the major producers: Dangote Fertiliser Limited and Notore have not been optimal. […]

Major farm input dealers have said Nigeria is running out of granular Urea fertiliser as stock shrinks. This has caused major concern in the sector as prices are likely to further escalate.

The National Agro Inputs Dealers Association (NAIDA) lamented that supply from the major producers: Dangote Fertiliser Limited and Notore have not been optimal.

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The $2.5billion Dangote fertiliser plant located at the Lekki Free Trade Zone, Lagos, has the capacity to supply three million metric tonnes of fertiliser while Notore Chemical Industries based in Port Harcourt, River State, has the capacity for 500,000 tonnes. This is in addition to Indorama, which has the capacity for over 1.5 million tonnes.

These companies have the capacity to supply about six million tonnes of Urea fertiliser, which is more than what the domestic market can absorb.

But sources said these companies were rather supplying lucrative markets elsewhere outside the country to gain more forex, creating scarcity in the domestic market.

But a source who spoke on the condition of anonymity also accused the agro-dealers of taking the product to other lucrative markets in neighbouring West African countries.

In a statement recently posted on its website, Indorama may well add substance to that claim.

“The company reserves the right to unilaterally cancel any sale order, DOs with immediate effect, and blacklist the agro dealer if urea sold to any of the registered ago-dealers moves out of the country. Agro dealers shall not distribute, sell or aid in the movement of Indorama urea outside their own territory as mentioned in the movement approval from the National Security Advisor (NSA),” the statement reads in part.

With regard to price, the statement further reads, “Granular urea price applicable to registered agro dealers for August, 2022, effective from August, 1 is N18,000 per 50 kg bag, ex-plant (N360,000 / MT) for sale inside Nigeria.”

The fertiliser industry in Europe has been severely impacted by rising natural gas prices, which have resulted in the closure of several fertiliser facilities in Europe. Natural gas is an essential feedstock for the production of synthetic fertilisers.

Prices are also causing decrease in fertiliser use, which has serious consequences for the safety of the world’s food supply.

The International Fertiliser Association estimates that the consumption of fertilisers could decline significantly across the globe.

 

The International Fertiliser Association painted a worrisome picture that if European farmers imported fertiliser, more fragile agricultural markets in sub-Saharan Africa, South Asia and parts of Latin America will severely suffer.

In Kano, our reporter spoke with Alhaji Kabiru Umar Fara, president of the National Agro Inputs Dealers Association (NAIDA) to explain why their recent publication was necessitated, and other issues that may have triggered Urea fertiliser price hike.

“Yes, we did the publication to clarify an allegation labelled against us, claiming that the reason behind the hike and shortage of urea supply in the country is that we are hoarding the commodity. This is absolutely false. We are not hoarding anything; we are business people, therefore, we buy to sell and not to keep.

“However, many agro dealers have deposited their monies with either Dangote or Notore for months without receiving any supply; does that mean the agro dealers are hoarding? Therefore, the inadequacy of the supply in the market isn’t the fault of the agro dealers. The only avenue agro dealers were exploring is that of Indorama, and even at that, their supply is based on allocation. Moreover, the allocation portal of the company is closed at present.

“We wanted to let the public know that we are not hiding anything. In fact, we have paid our monies to some companies but yet to receive supply,” he said.

Speaking further, Alhaji Fara said the issue was that of transportation, which is associated with the increase in diesel price. A truck that we used to pay N750, 000 from Port-Harcourt to Kano is now N1.5million, even above that at times. Therefore, you can see another reason behind the hike in the price of the input. Statistically, to transport one bag of Urea from Port-Harcourt to Kano now costs N2,500 instead of the usual N500.

In a response to the hoarding and stoppage allegations, the Group Chief Branding and Communications Officer of Dangote Industries Limited, Mr Anthony Chiejina, clarified that production had not stopped at the Dangote fertiliser plant at Ibeju-Lekki, Lagos.

“We load a minimum of 60 trucks per day, and there is nothing like a backlog of urea request orders. Our target is to satisfy our customers nationwide, and we have kept faith with it. Urea, like PMS (petrol), is being smuggled to different neighbouring countries, such as Chad, Niger, Mali, Burkina Faso, Cameroon, Ghana, Togo etc.

“Because of forex scarcity, some of the Urea dealers find it very profitable to sell across our border and earn foreign exchange, which is more lucrative for them than selling in the local market. The way out is for the Nigerian Customs Service to step up their monitoring and surveillance operations to track down the scale of smuggling across our borders.”

“Our price remains N17,500 per bag of fertiliser and our commitment is to empower our monitoring and evaluation team to ensure that our customers receive our urea first,” the Dangote spokesman explained to Daily Trust on Sunday.

Notore, in unaudited results for the half year ended, June 30, 2022, signed by Mr Ohis Ohiwerei, Group Managing Director/chief executive officer said, “the Group trades and exports its manufactured fertiliser products to West Africa, South Africa, South America and Europe.”

It further stated that the group currently supplies and sells its fertiliser products in all the 36 states and the Federal Capital Territory.

According to the company, it produces Urea, NPK and Ammonia and owns a Urea producing plant in Onne, Rivers State, with a current annual design production capacity of approximately 500,000 MTPA of Urea and 330,000 MTPA of Ammonia, while the NPK blending plant has a production capacity of 2,000 metric tonnes per day.

Email and WhatsApp messages sent to Olatoye-Sosan Olufela, the media contact, to react to the agro dealers’ claims, were not replied to. The phone number was also constantly switched off.