What incoming govt should do on fertilizer – FEPSAN

Mr Gideon Nagedu is the Executive Secretary, Fertilizer Producers and Suppliers’ Association of Nigeria (FEPSAN) – the umbrella body of all fertilizer producers and suppliers in the country. In this interview, the scientist explains some of the critical issues that have impacted the industry in the last two years and what the in-coming government should […]

Mr Gideon Nagedu is the Executive Secretary, Fertilizer Producers and Suppliers’ Association of Nigeria (FEPSAN) – the umbrella body of all fertilizer producers and suppliers in the country. In this interview, the scientist explains some of the critical issues that have impacted the industry in the last two years and what the in-coming government should look into.

 

What has happened in the fertilizer industry in the last two years?

In the last two years, we’ve been implementing the Presidential Fertilizer Initiative, which began in 2016. The essence of that initiative was to address local production of fertilizers. When this administration came in, one of the major challenges we observed was that even with our investment within Nigeria for fertilizers, it was not sufficient. The Nigerian farmer relied on what was imported and also on what was given to him. So, what you call soil-specific and crop specific fertilizers were usually not available. We only got the traditional 15:15:15, which most countries exported to Nigeria.

Now, when Mr. President came, the approach was to work with the private sector, particularly on how can we catalyse local production so that our farmers are encouraged to do soil testing and we can blend specific fertilizers that would help them maximize their output as part of the President’s agricultural policy. We engaged with the government and what we had was the presidential initiative.

We started with about eleven fertilizer plants that were active; and today we have 74 fertilizer plants. This is record-breaking and numerous authorities would attest to this – the IFDC, the International Fertiliser Association, the FAO would testify that there has been massive investment in the local blending capacity within Nigeria. It’s unprecedented and it’s quite an achievement. Most of these investments have been from the private sector, of course the government actively supported. When the programme started, the idea was to get the industries catalyzed, so government put in a lot of money to support the industry, and as a result we had a contract-blending approach. In the contract-blending approach, a few fertilizer plants were selected (about 15) in the industry. Government gave allocations to blend and government now controls the price across the country.

Well, the programme increased significantly and government could no longer continue, so they had to restructure the programme so that the private sectors can continue to run it. As far as government was concerned, the only way to sustain the industry was for the private sector to continue to grow the industry.

In 2021, that restructuring occurred but interestingly, we were facing serious challenges – very negative challenges. We had post supply chain crisis as a result of COVID-19 from 2020; and while we’re trying to come out of that, we encountered the Russian-Ukraine crisis.

Now let me explain, the supply chain crisis that occurred as a result of COVID meant that production plants had to shut down, it meant that shipping and all that was affected so it doubled the price, almost 100 to 150 percent increase in the prices of raw materials globally. We couldn’t cope, there was a big problem; interestingly, a lot of raw materials came but the prices were higher than what it used to be. The industry was still trying to grapple with that, farmers were still able to buy because the final output of their products – maize, corn and all that was still okay, they could accommodate it. Then we had in March last year, the Russian-Ukraine crisis. The last two years have been very tough because the industry has been trying to manage the whole fallout of the COVID-19 and the Russian-Ukraine crisis but the good news is that things are getting better.

In a bid to strengthen the industry, FEPSAN also pushed for the signing of the National Fertilizer Quality Control Act 2019. Has that helped the industry?

Well, to be honest with you, it has helped but I would be honest and say the industry could be better. We would be better by way of implementation. Unfortunately, the Ministry of Agric (particularly the Farm Input Supply Services) that is saddled with implementing this act, I believe, are doing their best within the frame work of what they have, but we’re worried that the pace of implementation is very slow. The result is that we see a lot of adulteration and it is everywhere.

How do you deal with the issue of adulteration as an association?

Our products are actively and constantly adulterated and it is very disturbing. We do our best as an association; we supported this bill becoming law. The reason why we did that was both for national and patriotic reasons and even for business reasons. Our business is heavily affected in the absence of proper implementation of this law because what these people do is that they simply fake your bags and look for brands that are doing well with the farmers and begin to put all manners of rubbish inside. Now, the problem we have is that when a farmer is discouraged because of your fertiliser, that act has effectively de-marketed you. There is little you can tell that farmer again about your brand that the farmer would believe. So, they’re costing us a lot of money, they’re costing us a lot in terms of brand integrity and we take it very seriously. We have raised concerns to the ministry, we’ve seen actions but we have not seen the biting that we would like. That biting is going to benefit not just us but the farmers and the country as a whole.

So, how do you want the government to deal with the issue of adulteration, because if it is not addressed, many framers would lose faith in your products?

We would simply ask that since we have a law now, it should be implemented to the latter. There are different agencies that I’m aware have different codes in their regulations that allow them to be able to implement this, like the Standards Organization of Nigeria. These acts are there, they can, of course, collaborate to simply implement the law, and it would do all of us a world of good.

How do you view those clamouring for importation as a way to deal with the issue of price?

I think it is a knee-jerk approach and a lazy approach to solving a fundamental problem. We have a very serious problem in this country. We are restricted in terms of access to forex, finance and all that, in terms of guarantee on area-specific and crop-specific fertilisers, importation will not solve the problem. Today, we have enough capacity; I just told you we have 75 blending plants under the presidential fertilizer programme. Apart from that, the capacity in-country today is about eight million tons. Nigeria is beginning to export NPK out of the country. So, today the whole aim is to ensure that the regulator is strengthened to be able to do his job which is to regulate quality, not contracts, not getting involved in the business but regulating the quality of what is produced at the production plant, at the distributor level. Take those samples and go and test them where companies are erring, regulators should bring down the heavy stick to make sure that people comply so that the farmer is getting the right product.

As at today, if you compare our consumption, we have more than enough capacity. We’re consuming about two million tons of fertilizer per annum, our in-country capacity today is more than eight million tons. So, we have a lot of idle capacity. In fact, the Dangote group, Indorama group and Notore export a lot of these after they have served Nigeria.

The new administration will take over in a few days, and given what the outgoing government did in agriculture, what should the incoming government do in the fertilizer business, which is critical to farmers?

As an association, we want whatever successes we have seen in this administration as far as agriculture is concern to be built upon and more importantly, if there are areas of short comings, those areas can be addressed. The first thing I would ask the incoming government to do is to take a study of what the fertilizer industry has been in the last seven years. If we’re going to be honest and objective, you would see that there has been significant improvement in the fertilizer space; they would see that for the first time, Nigerian’s consumption of fertilizer went up by 1.6 million tons.

Another area we would ask them to come in is to see a situation where access to forex is improved so that we’re able to do the business better. But largely, the PFI has been one of those success stories; you can see it for yourself, it’s working!

Again, the issues around adulteration are the biggest challenges affecting investors and farmers. Once these issues are resolved, let me tell you the truth, the farmer can go and farm and get his yield.

Then more importantly, the macro agricultural policies. One of the things that have really gotten the agricultural sector on the move is the deliberate policy positions of government to restrict importation of things that Nigeria doesn’t need. If the farmer is not doing well, my industry suffers because we’re an input industry. If he’s not able to produce, I can’t sell any fertiliser. So, the fact that the farmer is able to go to the farm and farm, it puts us in business. I want to ask the government to seriously consider the number of jobs, the investments that have been made, and the confidence that has been built within the agricultural ecosystem while it reviews policies and takes its own decisions.