Fertiliser production may face setback over Russia-Ukraine war

The Russia-Ukraine war and the possible global financial fallouts are projected to have a significant impact on the Nigerian fertiliser industry.

Russia is a major supplier of nitrogen globally and with the sanctions slammed on it by the United States and its European allies, experts said they would affect the international nitrogen supply.

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Ukraine is also a key global supplier of nitrogen, while Belarus, which also faces sanctions over its role in the war, is also a huge supplier of other ingredients like potash for blending fertiliser.

An expert, who would not want his name in print, said Nigeria and the world at large would have issues with the availability of fertiliser as a result of this war.

He said: “Both Russia and Ukraine jointly control about 35% global supply of Urea fertiliser. Nigeria may not be affected much by this, because we have Dangote, Indorama and Notore.

“The fear is they may want to attract FX by exporting to fill the gaps created globally hence may cause local shortage.

“Where Nigeria may have serious issues is with NPK, as Russia alone has 25% of world’s Potash deposits used in the blending of NPK. So, Nigeria may witness a hike in the cost of NPK fertilizer.

“The only thing to do is to start early, which means start now, to place orders and begin stockpiling before April,” the source said.

Architect Kabiru Ibrahim, president of the All Farmers Association of Nigeria (AFAN) told Daily Trust in Abuja that “we are likely to see a rise in the global prices of fertiliser and wheat due to the conflict between Russia and Ukraine but we should not panic as there are alternatives.”

He said the country must look inward for solutions to these problems as “everyone did at the heat of the COVID-19 pandemic.”

He however warned that “If the crisis continues, the next three months will be very challenging for the entire globe and most certainly there is a serious possibility of price hikes in fertilisers and some food crops such as wheat and food oils like sunflower and a host of others.”

In an exclusive interview with Daily Trust in Abuja, the Executive Secretary, Fertiliser Producers and Suppliers Association of Nigeria (FEPSAN), Mr Gideon Negedu, explained what the producers have in place at the moment and going forward to deal with this sort of situation.

He said the prices of fertilisers internationally have tripled even before the Ukraine/Russian war because of the COVID pandemic. But while the market was beginning to recover in February, the Russian-Ukrainian war caused a lot of tension in the market in getting access to potash.

The association’s executive secretary said what the country takes from Russia under the Presidential Fertiliser Initiative is potash, but added that the percentage requirement of potash in fertiliser is usually just about 16%.

He however said measures have been put in place to ensure that the country has access to some potassium.

Developing alternative

The executive secretary said the fertilizer industry has been working with research institutes like IITA, IAR, BUK and Nigerian Agricultural Extension Research Liaison Services to come up with a blend that does not require potassium.

“We’re not saying that we don’t need potassium; we need it. Potassium is very important because it helps in photosynthesis, but we have a challenge now. If we, for any reason, don’t have enough potassium, we might fall back to some of the blends we have.

“Also, we had a lot of stock from last year into this year. So, today our stock count, apart from what is in the hands of dealers all around the country, is over 400,000 metric tons,” he said.

More raw material shipments underway

Mr Negedu said the country’s average yearly consumption is about one million tons of NPK. So far, there are more than 400,000 tons in stock besides what is in the market, noting that before the intensive agricultural activities commence in the North in May or June according to NiMet’s prediction, more production will be ramped up.

He confirmed that a couple of vessels are due to arrive this month with raw materials for fertiliser plants and that “those materials will start arriving anytime now.”

Besides that, he said, the country has already stocked the fertiliser needed for the Anchor Borrowers’ Programme(ABP).

We have more than enough urea fertiliser

With regard to urea supply in the country, he stated that Nigeria does not need to import. “We are a net supplier and exporter of urea. We produce, we don’t import a single bag of urea into Nigeria, it is banned.

“So, we have capacity as a country to produce six million tons of urea. Dangote’s capacity is about 3 million, Indorama is about 2.8.

“Last year alone, Notore, Dangote and Indorama produced about 2.2 million tons of urea. What we consume in Nigeria is 1.3 million tons of urea. So there’s even too much if you ask me,” he said.

High price of diesel causes more tension

The fertiliser producer said there are other factors that affect production; those are things to be concerned about, referring to the rising cost of diesel in the country, which currently sells at over N700 per litre.

“If the analysis is correct, it may end up at N1,000 by the end of this week. Yesterday, it was N710 per litre. This is the diesel we bought at N300 which has now more than doubled within the last few weeks.

“It means the cost of logistics (logistics is about 30% of what we do as an industry) will go up. Now that tells you the price (of fertiliser) may go up.

“All our blending plants, all our factories use mainly diesel and so diesel has gone up, that is the challenge,” he said.

Number of blending plants today

“As of today, the country has about 70 fertiliser blending plants across the country and the number is increasing as private individuals are investing more in the industry.

“Before the Presidential Fertiliser Initiative (PFI), most of the blending plants were down – to less than 10. But now, some states like Kano have up to 12, Kaduna has more than seven plants.

“So there is enough, we have a lot of fertiliser plants. We just need to get the raw material,” Mr Negedu said, adding that “We expect the prices of fertilisers to significantly come down.”

He, however, stressed that the country needs to invest more in developing the local deposits of some of the ingredients for making fertiliser, which the country has in many states.