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Livingstone Marufu —
FERTILISER manufacturing companies are appealing to the Reserve Bank of Zimbabwe (RBZ) to be included on the foreign currency priority list for buying raw sulphuric acid from South Africa so that they supply adequate quantities to the market.
The fertiliser industry had budgeted to supply farmers with about 360 000 tonnes of Compound D and ammonium nitrate in the current cropping season but it has emerged that the firms do not have any reserve stocks.
Chemplex Corporation CEO and fertiliser industry spokesperson Mr Misheck Kachere told The Sunday Mail Business that the fertiliser situation is not looking good as many suppliers are failing to fulfil farmers’ demands.
“At the moment we are working from hand to mouth, which means that we don’t have any reserves or stocks to talk about. We only have the few supplies which are taken as soon as they come or as they reach our factories.
“Delays in transmitting foreign currency or delays in telegraphic transfers due to cash shortages have impacted negatively in the purchasing of top dressing fertiliser and raw materials, resulting in massive fertiliser shortages in the country.
“This liquidity crunch has had its impact on our targeted command agriculture as many farmers are still in queues to get the much needed Compound D. We are trying to manage the situation but things are really bad in the fertiliser industry,” said Mr Kachere.
Analysts suggest that despite the liquidity crunch, many companies are not used to supplying large amounts of fertilisers as they anticipated a drought or low uptake of fertilisers. Last year, there was only 40 percent uptake of the product due to a devastating drought caused by El Nino.
However, demand for basal and top dressing fertiliser is sky high due to the predicted high rains this season, and Government’s command agriculture programme.
Chemplex Corporation — the country’s largest fertiliser and chemical manufacturing company — has invested US$27,5 million in its three units to ramp up fertiliser production.
Six months ago, Chemplex’s companies such as Zimphos and Dorowa Minerals that were under sanctions, were operating at around 10 percent capacity. The firms have since ramped up capacity to almost 90 percent after a combined fresh capital injection of US$12,5 million.
Despite robust efforts by companies to increase output, local demand for fertiliser is still outpacing supply as raw materials are taking long to get into the country because of electronic transfer bottlenecks. Mr Kachere said they are in talks with monetary authorities to local viable avenues of circumventing the payment challenges.
“We have engaged the RBZ and the Finance and Economic Development Ministry to put us on the (forex) priority list so that we can attend to the critical situation at hand. They are doing their best to ensure that we get the required forex for the raw materials . . . I hope if they continue working flat out, supplies may improve significantly soon,” he said.
The local fertiliser industry has an installed capacity of 900 000 tonnes of Compound D and ammonium nitrate per annum, against a national demand of 330 000 tonnes.
Statistics show that 440 000 tonnes were produced during the 2013/14 agricultural season. Some farmers are reportedly getting fertiliser from South Africa, Malawi and Zambia, where prices are generally lower that Zimbabwe.
Government’s Industrial Development Policy for 2012–2016 had identified the fertiliser industry as one of the priority sectors to anchor industrial growth.
Duty free importation of fertiliser was, however, to be ring-fenced in cases where local production was insufficient to meet demand. This has seen fertilizer prices going down from US$600 to US$500 per tonne of Compound D this cropping season.
Ammonium Nitrate prices have equally gone down from US$650 to US$550 per tonne this year. Agriculture, Irrigation Development and Mechanisation Minister Joseph Made believes fertilisers should land in Zimbabwe cheaply to cushion farmers from high input costs as well as guaranteeing adequate supplies on the domestic market.
Online Reporter