Indorama set to crash fertilizer prices in Nigeria

Prices of fertilizer, especially the Urea brand, will soon fall in Nigeria, which would bring a big boost to the agricultural sector where the Federal Government and the federating states are looking to diversify the oil-stressed economy.

This is, as Indorama Eleme Fertilizer and Chemicals Limited (IEFCL), Port Harcourt, begins pumping its 1.4 million metric tons (MMT) capacity of Urea fertilizer into the domestic market.

According to information gleaned from the Indorama website: Fertilizer News, its managing director/CEO, Manish Mundra has assured that the company will crash fertilizer prices through its huge supplies of the product in the next couple of months, when its $1.4 billion Urea fertilizer plant goes full blast.

Mundra assures fertilizer distributors and general agro-dealers in the country that the company, whose fertilizer plant is the world’s largest single line Urea plant, would supply them with “high quality fertilizers at a price that would be lesser than imported ones.”

BusinessDay checks across the South-East and South-South geopolitical zones show that fertilizer prices have increased to 16.66 percent and 18.18 percent between last year’s (2015) farming season and this year’s.

For instance, in the South East, a bag of fertilizer now sells for N7,000 up from N6,000 last year, while it now sells for between N6,000 and N6,500 in the South-South zone, up from N5,500 it sold last year.

According to Foraminifera Market Research, an agro research outfit, about 80 percent of all fertilizers used in Nigeria are imported, thereby accounting for huge importation costs.

Over the years, since 1976, Nigeria has subsidised fertilizer importation running into billions of naira. In March this year, the Federal Ministry of Agriculture and Rural Development (FMARD) inaugurated the National Fertilizer Technical Committee (NFTC) to manage fertilizer issues in the country. Since 1976, Nigeria has subsidised fertilizer running into billions of naira, now put at 25 percent. In 1992, the country spent N6.8 billion to subsidise fertilizer imports.

Foraminifera Market Research notes that fertilizer market in Nigeria “is national, expanding and sustainable.”

For Friday Udoh, a chartered economist and Council member of the Institute of Chartered Economists of Nigeria (ICEN), in an interview with BusinessDay, advised that Nigeria must get its productive sector up and running in order to drive economic growth, away from the current crude oil stress.

But Mundra, Indorama’s MD/CEO, has assured that his company’s 1.4 million metric tons fertilizer production capacity is enough to go round Nigeria and leave much for export, saying IEFCL has set aside 400,000MT of its Urea fertilizer to serve the Nigerian domestic market, and 1 million MT for export.

Already, foreign consumers from West Africa market – Mali and Cameroon – have since visited Indorama Eleme Fertilizer and Chemicals Limited plant to secure export orders to their countries.

Mundra, while addressing channel partners of the product recently, when they visited the Indorama new fertilizer plant at Eleme, Port Harcourt, assured them that the company would use its warehouses across the country to facilitate timely delivery of fertilizers to all dealers, stressing that the company would not allow any case of hoarding of its product by anyone.

Before the Indorama’s (IEFCL) Urea fertilizer, which is expected to be commissioned soonest, Nigeria had only one Urea fertilizer plant – Notore Chemical Industry’s 560-kilo tons per annum (ktpa) Urea production, and one metric ton per annum blending plant, which started operations 2009, following the company’s acquisition of the liquidated Federal Government-owned National Fertilizer Company (NAFCON) Onne, Port Harcourt, in 2005.

Added together, the country would soon be producing 1.96 million metric tons of Urea fertilizer.

BusinessDay gathers that Nigeria’s fertilizer consumption per hectare of land is put at about 20kg, making the country hugely lacking behind South Africa and Egypt that both consume over 100kg per hectare of arable land.
Also, checks from a World Bank data supplied by United Nations agency, the Food and Agricultural Organisation (FAO) note that Nigeria’s fertilizer consumption per hectare of arable land was 17.8kg in 2013. Today, it is estimated at about 20kg.

According to Federal Ministry of Agriculture and Rural Development (FMARD), Nigeria has 84 million hectares of arable land, of which 40 percent (or 32m hectares) is under cultivation.
But Mundra says with its incoming 1.4MMT fertilizer plant, Nigeria would be self-sufficient in fertilizer production and move on to become a net exporter of the all-important agric input.