Ethiopia's appetite for agricultural inputs has been growing

Tag : fertilizers
Ethiopia's agriculture sector has been waiting for the approval bythe World Bank (WB) of a transfer of 250 million dollars from otherprojects for the procurement of 550,000 metric tonnes of fertilizerfor the 20008/09 fiscal year.
Though the government's prospect of succeeding in the negotiationslooks good, the WB has not yet channelled any amount to that end.
Ken Ohashi, country director to Ethiopia and the Sudan told Fortunethat his office has recommended the approval of the request by theEthiopian government, currently under internal evaluation at seniorlevel at the WB's Headquarters in Washington D.C.
"I hope it will be finalized within this month," he said.
The government requested the bank to transfer the amount from thefinancial support the latter has already approved forinfrastructure development programmes.
The Council of Ministers during its meeting on August 1, 2008,passed a decision to ask for the transfer 301 million dollars offunds from the World Bank and African Development Bank (AfDB) tohelp it stabilize the current soaring inflation.
Of the total amount, 237 million dollars of the transfer isexpected from WB, with the remaining 64 million dollars from AfDB.
The short term aim of the transfer is to use part of the fundssecured for the execution of ongoing development projects topurchase agricultural inputs, particularly fertilizers, according apress statement issued by the Prime Minister's Office.
The statement said the fertilizer price in the international markethas been skyrocketing more than ever before.
Though Ethiopia's appetite for agricultural inputs, mainly for fertilizers, has been growing year by year, its supply, especiallyover the last three consecutive years, has remained short ofsatisfying demand.
For instance, in 2006/07 while the demand was estimated at 650,000metric tonnes, the amount procured was only 500,000 metric tonnes.And for the concluded 2007/08 fiscal year, the plan was to secure530,000 metric tonnes. However 100,000 metric tonnes could not besourced as there was no supplier interested in doing so due to thesoaring price of fertilizers.
According to the Plan for Accelerated and Sustained Development toEnd Poverty (PASDEP), the anticipated amount for the current fiscalyear was 760,000 metric tonnes but Ministry of Agriculture andRural Development (MoARD) reduced it to 550,000 metric tonnes dueto the current inflated price of fertilizers in the internationalmarket.
"We were significantly delayed from the time that we have to floata tender for the procurement of the fertilizers," an official fromMoARD told Fortune. "But we can not float the tender unless wesecure the finance."
Despite this hurdle, MoARD will float a tender next week for theprocurement of 150,000 metric tonnes of DAP and 75,000 metrictonnes of urea, in the hope that the transfer requested would havebe finalized this week, the official said.
Though the decision by the WB would be that to come from a seniorlevel, Ohashi said that his office understands that Ethiopia hasbeen delayed from its normal schedule for the procurement offertilizers.
Every year, Ethiopia secures fertilizers but the increase in theprice has forced the government to reduce the amount anticipatedfor each year in accordance with the PASDEP.
In the last round of procurements made last year, bidders offered871 dollars for a tonne of DAP, including transportation cost. Twoyears ago, the price for the equivalent amount of the same kind offertilizer had been 400 dollars.
To cope with the increasing price, the MoARD has undertaken a studyto change the procurement scheme, though it has not yet beenapproved.
Yakobe Yala, state minister for Agricultural Marketing at theMoARD, however, held a meeting in July 2008 with cooperative unionsengaged in importing fertilizer and told them to organizethemselves to import jointly under one of the unions so that theycan shoulder the price hike collectively.
Fortune's attempt to get comments from Yakobe were unsuccessful.