The prices of fertilizers vary throughout South Africa. International prices have a direct effect on the local prices of fertilizers. South African fertilizers are heavily dependent on international prices because most of their raw materials are imported from foreign countries. International prices, which reflect a country’s exchange rate and border price, are generally higher than the local prices. Despite these differences, local prices are relatively stable, varying with international prices only occasionally.
The rise in input costs will cause farmers to face difficulties absorbing the rising prices. The rise is most acute for grain commodities, such as maize, so staple foods will likely be more expensive. Maize production is set to reach 16.2 million tons by 2021. South Africa currently consumes 11.5 million tons of maize annually. In addition, the rising costs of fertilizers and herbicides will make it harder for farmers to increase production.
The country relies on the international market for most of its fertiliser, and sources it primarily from Saudi Arabia, China, Russia, Germany, and Qatar. The country is a net importer of fertilizer, and therefore depends on international prices and the price of oil. In addition to imported fertilizer, South Africa also produces some of its own, but only small amounts. Therefore, the country is at the mercy of global prices.
Fertilizer price list for maize, Tanzania: Using the recommended rate of nitrogen in the field results in moderate increases in yields. However, higher yields are not necessarily associated with higher net revenues. In the case of maize, a recommendation of 55 kg/ha of nitrogen results in higher yields but lower net revenue. This calculation is based on average seasonal rainfall data for 1980-2019.
To generate the list of fertiliser prices, we used 601 spatially-located observations of price changes for maize in Tanzania. We also included predictor variables for market access and potential demand such as cropland, population density, and precipitation averages. We then used these models to estimate the price per kilogram of maize. The model correctly predicted prices in six regions, with an RMSE of 0.17.
Prices of fertilisers
The weak rand has impacted the prices of fertilisers in South Africa. Prices have increased by as much as 20% in the past year. In April, the price of diammonium phosphate jumped 22.6%, while prices of urea and ammonium sulphate soared. The high prices also affected the affordability of fertilisers, leading the IFA to revise its forecast for 2021/22 to a contraction of 2.7%.
Fertiliser prices have risen significantly since 2007 in rand terms. The price of potassium chloride, ammonia and urea increased 427% and a staggering 189% for DAP and urea. However, the rand has held strong for the past few years, cushioning the local industry against these rising costs. In South Africa, fertiliser accounts for between 30% and 50% of the farmer’s input costs.
Impact of war in Ukraine on supply
Agricultural commodities are being pushed up in price due to the shortage of nitrogen fertilizer. As a result, crop production in Kenya has dropped. The impact of the war in Ukraine has further increased this problem. According to CF Industries, a major fertilizer supplier, global fertilizer supplies are already tight due to the conflict. The Black Sea has closed down, meaning that stocks of these commodities haven’t been able to be released into the market.
The war in Ukraine is disrupting trade. Both Ukraine and Russia export a lot of grain. The ag minister in Ukraine recently predicted that spring planting in Ukraine could be reduced to half of last year’s level. Additionally, the country doesn’t produce enough machinery to make fertilizer and other agricultural products. As a result, a shortage of fertilizer could have serious effects on crops and farmers’ livelihoods.
Greener alternatives to chemical-based fertilizers
In order to raise agricultural productivity, the SSA needs to adopt innovative approaches. Although the region represents 10% of the world’s population, it only accounts for 1% of global fertilizer use. Average fertilizer use in SSA is 15 kg/ha, while global rates are close to 60 kg/ha. Fertilizer use in SSA varies widely across regions, while the adoption of improved seeds is low.
A growing interest by global investors in Africa’s fertilizer market has led to increased investments and a shift to more balanced nutrition. The market for fertilizers in SSA has been evolving from a centralized control system to a competitive market, and governments are shifting from state-controlled and subsidized systems to more streamlined, private-sector-driven models. However, despite the potential for significant benefits, there is no consensus in policy and regulation and progress is slow.