By Isaac Mwangi and Anne Kiruku
Despite President Uhuru Kenyatta’s efforts to woo Russian businessmen to support a fertilizer manufacturing factory when he addressed more than 40 of them during his recent visit to Russia, Kenya is yet to identify an investor to take up the project.
The Ministry of Agriculture, Livestock and Fisheries has now asked interested firms to submit expressions of interest by October 17.
An advert carried in local newspapers said the government was seeking to engage a strategic investor with extensive experience in manufacturing of DAP, CAN and a range of NPK fertilizers.
“The overall objective of the assignment is establishing a fertilizer plant in the country, thereby bringing down costs to the farmer and also to exploit the vast potential market that exists in the East Africa region,” the ministry wrote in their ad.
The main types of fertilizers used in the country are the compound fertilizers that provide both nitrogen and phosphate. Fertilizers used in planting grains, such as Di-ammonium phosphate (DAP) and Nitrogen phosphate potassium fertilizer (NPK) form the bulk of fertilizers consumed in the country.
Straight nitrogenous fertilizers such as CAN and Urea are used for top dressing, DAP is used on maize and MAP is used on wheat. Varieties of NPK fertilizers are used on tea while murate of potash (MOP) is used on coffee. Specialty fertilizers are mostly used on horticultural crops, especially in the flower industry.
Though the bulk of imported fertilizers are used by large scale farmers, there has been a steady rise in usage by small-scale farmers for growth of food crops (such as maize and domestic horticulture) and export crops.
“We are happy that the government has clarified that fertilizers are not affected by recent increases in VAT (value-added tax). Prices were already going up and this would have made it impossible for many of us to [continue to] use fertilizers,” said Emily Wanjiru, a small-scale farmer in Ruiru on the outskirts of Nairobi.
According to Kenyatta, Kenya needs a total of 500,000 metric tons of fertilizer per year and the amounts are even higher when the greater East African region is put into consideration.
In January of this year, the government imported one million bags of fertilizer worth $23.4 million. This was in addition to a further 800,000 bags that were in the stores. The consignment was for the March-April planting season.
Lack of a fertilizer manufacturing plant has hindered the growth of the agricultural sector in Kenya. This is despite the fact that agriculture employs more than 80 per cent of the workforce and contributes to 60 per cent of total export earnings and about 45 per cent of government revenue. The agricultural sector also contributes 30 per cent of the Gross Domestic Product (GDP). In addition, the sector satisfies most of the country’s food requirements.
A report by the Egerton University Institute of Agricultural Policy and Development shows that fertilizer usage in the country has been on the rise since the importation of fertilizer was liberalized in 2002; previously, only the government could import the commodity. The report says that the government imports the commodity through two agencies – the Kenya Tea Development Agency (KTDA) and the National Cereals and Produce Board (NCPB).
The report, “Trends and Patterns in Fertilizer Use by Smallholder Farmers in Kenya,” says the factors contributing to the rise in fertilizer usage in the country include increased private sector participation in the industry as well as a stable market policy. There has also been a rise in private sector participation in both the importation and retailing of fertilizer after liberalization of the sector in 1990s.
There are 10 importers, with four major firms controlling more than 85 per cent of the market share. There are about 8,000 retailers.
Availability of the commodity in the rural areas due to the private sector’s investment in the distribution network has boosted fertilizer usage in the country since farmers do not need to walk long distances to get the commodity.Credit arrangements and provision of training have also worked well to boost the industry.
“With intensive land use in many densely-populated areas, fertilizers are a must-use for high productivity to be maintained. The problem is that many small-scale traders do not use fertilizers consistently and in the right quantities due to financial constraints,” said Charles Maina, an agricultural extension officer.
Most of the imported fertilizer is used during the planting season. In 2012, some 300,000 mega tons were used during the March-April planting season. A further 150,000 mega tons was used for top-dressing. The biggest consumers are cereals, which consume about 150,000MT, followed by horticulture – which takes up about 65,000MT.
Tea and coffee farmers are also major fertilizer consumers, with the former using about 50,000MT and the latter 40,000MT per year. The high usage of fertilizer in horticulture, tea and coffee sub-sectors has boosted the industries, making them major foreign exchange income earners for the government.
The major sources of fertilizers are the U.S., Europe, the Middle East, Asia, and South Africa. Other entrants are China, India and Singapore. The major American fertilizer exporters to Kenya are Aerostar Global Logistics, Maas Nursery, and Woodburn Fertilizer Inc.
The report noted that sub-Saharan African countries are the lowest fertilizer users in the world. Kenya, however, is among sub-Saharan countries with the highest fertilizer user rates.
Three factors largely determine the use of fertilizers by Kenyan households: product availability, affordability, and expected returns (input-output ratio). According to Alfred Githege, an agricultural extension officer based in Kiambu County, availability of information on benefits, use and recommended ratios of fertilizer also determines fertilizer usage among farmers.
The report grouped fertilizer users into three classes; the consistent users (uses one type in four different waves), the non-consistent users (on-and-off user), and consistent non-users (never used fertilizer at all). Under the consistent non-user category, the study noted that these households are mostly headed by women — the head of the household is above 65 years old and has only attained a few years of formal education.
MEA Fertilizer, the largest local importer, distributor and blender of fertilizers, has been importing the commodity from these manufacturers. Eustace Muriuki, the firm’s managing director, says that the government’s call for investment partners to put up a fertilizer manufacturing factory locally may be expensive in the short term.
“Lack of raw materials for manufacture of fertilizers will frustrate these efforts since all the raw materials have to be imported,” he said.
The government’s initiative to remove controls and import licensing quotas has encouraged investors involved in the importation of fertilizers. The government has also scrapped duty and Value Added Tax (VAT) on the commodity, further encouraging its use by farmers.