Minister of Agriculture Adel El-Beltagy described the recent governmental decision to increase the price of fertilisers to EGP 2,000 per tonne will tackle the black market.
The price rise from EGP 1,500 per tonne is also part of a move to protect fertiliser producers threatened with bankruptcy.
El-Beltagy told Daily News Egypt that “the government’s decision will raise the price of a bag of urea to EGP 100 and nitrates to EGP 95”. He added that the current prices are almost 50% less than market prices because they are subsidised by the government.
Investment Minister Ashraf Salman told Daily News Egypt last week that the government is considering cancelling a fee imposed on the fertiliser industry.
However, El-Beltagy said: “I refuse to cancel the fee imposed on fertiliser manufacturers until the needs of the local market are met.”
He added that Egyptian farmers previously received two bags of fertilisers at approximately EGP 75 per bag, but were forced to purchase another two at a price of EGP 150 per bag from the black market.
El-Beltagy said that raising prices will allow government companies, particularly Abu Qir Fertilizers Company which supplies 60% of the Agricultural Credit Bank’s needs, to increase production. It will also provide for all of farmers’ needs without their having to resort to the black market. The government has also previously pledged to provide for 95% of fertiliser plants’ natural gas needs.
“Many fertiliser plants have halted production under the pressure of a lack of supply of contracted quantities and pressures of natural gas, which rendered companies unable to fulfil production agreements,” said Chamber of Chemical Industries Chairman Sherif El-Gabaly. “This led to the creation of a black market for nitrogen fertilisers, and exerted an adverse impact on farmers due to companies’ inability to supply the contracted fertilisers to agricultural associations.”
But Head of the Farmers Syndicate Osama El-Gahesh questioned the government’s ability to eliminate the fertiliser black market, which accounts for a large percentage of factory production. He expects black market prices to increase and said that the government replacing the black market by increasing production would require time.
El-Gahesh said he predicts that an increase in black market prices ranging between EGP 3,500-4,000 will burden the ordinary farmer with crippling costs. He demanded that government provide subsidised fertilisers to farmers and to not to land owners.
Farid Wassel, head of the farmers and agricultural producers syndicate said: “The government should determine the prices of agricultural crops for the farmer in advance so that he can be assured before the start of the agricultural cycle and calculate the cost of production.”