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In order to boost the livelihoods of small Ethiopian farmers, the government takes seriously the launch of local production of fertilizer
One of the first steps of Abiy Ahmed as the new Ethiopian Prime Minister was to advise end of April construction of a fertilizer factory for a military-industrial conglomerate. The state-owned Metals and Engineering Corporation (METEC) took over the $ 400 million Yayu project six years ago, but it is still half completed.
The announcement signals several things, including the inadequacies of METEC. by the Ethiopian army. This was also an indication of the high priority attached to fertilizer production by the new administration, and a reminder of the challenges facing a country that has one of the largest populations of small-scale farmers. and an agricultural sector that accounts for almost 40% of national income. Ethiopia urgently needs to consume and produce more fertilizer. The troubled history of the Yayu factory is only the tip of the iceberg.
Many of the national agricultural statistics are encouraging. Cereal production tripled between 2000 and 2014. Productivity also increases. Average yields for all crops are increasing, largely reflecting a more efficient use of fertilizers – even more so since the introduction of a national soil map in 2014.
"L & # 39; Ethiopia has dramatically improved its productivity, "says Aweke Mulualem Gelaw, director of soil health and fertility at the Agricultural Transformation Agency (ATA)," and mainly because of fertilizers. " Improving seed quality and agricultural extension services are other important priorities of the government's agricultural programs.
Nigeria is the largest fertilizer market in sub-Saharan Africa (excluding agriculture). 39, South Africa), according to the International Fertilizer Association. The demand for fertilizer increases by about 18% per year. In 2018, the country will import more than 1 million tons, compared to 200,000 tons in 2010. The government aims to make all small farmers use fertilizers by 2025.
Ethiopian farmers can afford to Use these inputs because fertilizer prices are lower in Ethiopia than elsewhere in the region. According to a 2013 study by Shahidur Rashid, Nigussie Tefera, Nicholas Minot and Gezahegn Ayele, fertilizers in Ethiopia were 15% cheaper than in neighboring Kenya. Revealingly, this has been achieved without resorting to the kind of direct subsidy programs found in Kenya and many other African countries.
Import Monopoly
A state-owned and complex supply chain that includes a large monopoly of import and distribution via cooperatives farmers, whose profit margins are strictly limited. The Government argues that the monopoly of imports is lowering wholesale costs. It also indicates that it is reducing costs through its ambitious program of road construction and the launch of a new Djibouti railway in Addis Ababa, the Ethiopian capital, in early 2018. [19659004] 
But the fertilizer network is under pressure. Despite the lack of direct subsidies, fertilizer promotion has implied implicit budget costs of about $ 40 million per year since 2008, according to the 2013 study. Meanwhile, as demand grows , the pressures increase. The government has spent nearly $ 600 million this year buying fertilizer from abroad, according to Seifu Assefa, chief of marketing marketing of inputs at the Ministry of Agriculture. This represents a 26% increase from one year to the next, mainly due to the rapid expansion of consumption.
In times of acute shortage of foreign exchange, fertilizers are one of the country's main imports. Ethiopia's trade deficit quadrupled to $ 14 billion in 2016 from $ 3.19 billion a decade earlier. Two weeks after taking office, Prime Minister Abiy told local business leaders that the currency crisis could last up to 20 years.
In 2008, the country was struggling with fertilizer supply problems. until he managed to get a $ 250 million loan from the World Bank. This cycle is recurrent. Last year, the price of urea – the most popular fertilizer for Ethiopian farmers – averaged $ 257 a tonne; This year, it reached $ 320, largely due to a 15% devaluation of the Ethiopian Birr in October 2017. The government has increased the monopoly of imports to try to mitigate the increase last year and since then, he buys fertilizer directly from manufacturers at a fixed price on a three – year contract.
The need to stimulate local production is becoming more and more urgent. "It is time to produce instead of wasting money on these big transaction costs," says Shahidur Rashid, senior researcher at the International Food Policy Research Institute (IFPRI). With the uncertainty of the Yayu plant, the hopes of the government are based on an agreement signed in 2016 with the Office Cherifien Phosphates (OCP), the world's largest exporter of phosphate, to build a $ 3.7 billion plant near the town of Dire Dawa.
The plant, which represents one of the largest investments ever made in Ethiopia, is expected to produce 2.5 million tonnes of fertilizer in its first phase by 2022. The construction has not started yet. A second phase could help to invest $ 1.3 billion more to increase production to 3.8 million tonnes three years later, making it one of the largest facilities in the world. fertilizer in the world. OCP is also part of the companies that could be considered to be taking over the Yayu project if Abiy's administration decided to terminate the METEC contract.
Imports are not the only part of the distressed supply chain. Many experts fear that the distribution model through small and often fragile cooperatives may not be viable. For the moment, profit margins are determined by regional agricultural offices and some are kept dangerously low. Many cooperatives store fertilizers in dilapidated facilities that are little more than wooden huts, sometimes several kilometers from farmers in the area. "They can not continue this way, relying on primary cooperatives with very limited capabilities," says Shahidur of IFPRI. "This is not a sustainable model, especially as wages start to rise."
Radical Change
ATA is currently implementing a private sector distribution system based on a competitive introduction model. in seed distribution launched in 2015. The first trials of the system, called "direct marketing of inputs", are scheduled for July this year. For the moment, this pilot project will coexist with cooperatives and price increases will continue to be regulated.
Some call for more radical changes. Mandefro Nigussie, director of the Ethiopian Agricultural Research Institute, contends that the distribution should be carried out by commercial traders, in line with those that are generally found in most of Asia. "We would like fertilizers to be sold at the village level, with soap and all the other items," he says. The current process, he says, is too long and complex, adding unnecessary costs: "The simpler the process, the more farmers will be able to take fertilizer."
Shahidur agrees, saying that the gradual expansion of state control of the fertilizer market since the initial liberalization of the beginning of the 1990s should be settled. "If you look at the growth of the fertilizer market, they've done a good job, but the question is, when are they going to let the private sector participate in that?"
: L & # 39; increased use of fertilizer, and with it productivity – Credits ]: Edwin Remsberg / Getty Images
From the print edition of July 2018 [19659023]
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