Fertiliser

By  Crusoe Osagie

The Minister of Agriculture, Dr. Ayo Akinwunmi Adesina, has denied allegations that his ministry is in the process of appointing Notore Chemical Industries Limited and Federal Super Phosphate Company, Kaduna, as the sole suppliers of fertilizer to the ministry for onward distribution to farmers nationwide.

The minister’s denial is coming on the heels of a similar statement by Notore Industries that it is coercing the federal government into adopting or implementing a backward integration policy in the fertiliser industry, similar to what has obtained in the cement manufacturing industry.

Backward integration is a government policy designed to encourage investment in local production of commonly used commodities by restricting the importation of such commodities to only companies that have invested in local manufacturing of that commodity.

Adesina’s statement was in reaction to an advertorial last week by Fertiliser Stakeholders of Nigeria, accusing Notore and Federal Super Phosphate, under the aegis of Indigenous Manufacturers of Nigeria, of coercing the ministry into making them the sole suppliers of fertilizer as an incentive to encourage investment in local production.

The minister, who spoke exclusively to THISDAY at the weekend, dismissed the advert, stating that there is no such group known as the Fertiliser Stakeholders of Nigeria.

He said he had been meeting with manufacturers and importers of fertiliser in the country, and had intimated them of the ministry’s plan to stop the distribution of fertiliser and hand it over to the private sector.

“Right now, through the distribution structure we operate, only 11 percent of the farmers have access to fertiliser, but through the structure which we are trying to put in place, that will be private sector driven, we estimate that 94 percent of farmers will have access to fertiliser.

“That being the case, there is no way we will be awarding contracts to any company to supply fertilizer to the ministry for onward distribution to farmers, because the current regime has been flawed and has failed to make the commodity available at cheap prices,” the minister explained.

Adesina stated that his ministry is targeting wholesale reform in fertiliser production and distribution in Nigeria, in which the government will no longer be involved in the distribution of the agricultural input.

“We intend to stop people and companies from coming to the ministry for the award of contracts to supply fertiliser.  Our goal is to use private sector agro-dealers to create distribution channels,” he explained.

Adesina added that his ministry is also working on the introduction of a Growth Enhancement Support Scheme (GESS), which is a targeted support programme directed at farmers.

“Our focus is on 20 million farmers over four years, which translates to five million per annum, and to get to them, we shall use the GESS that would enable them buy fertiliser directly from agro-dealers.

“In this regard, we have been meeting with the Central Bank of Nigeria to ensure that the agro-dealers are linked to banks from which they can access credit that would enable them stock up on fertiliser in their warehouses.”

With this initiative in place, farmers can use the fertiliser vouchers at their disposal to buy the commodity at a discounted price, following which the agro-dealer would present the vouchers at the ministry for redemption.

Adesina assured that the advantage the voucher scheme has over the government distribution scheme, through which a few people corner the market for fertiliser and stifle the private sector market for the commodity, millions of farmers will have access to fertiliser.

“Our estimate is that 94 percent of farmers will have easier access to fertiliser under this new initiative, as opposed to 11% under the government distribution scheme,” he said.

Meanwhile, Notore, in a statement to THISDAY, said that contrary to speculations, it has not and is not championing the implementation of any such policy to prevent stakeholders from taking part in fertiliser business in Nigeria.

The company said, rather, it is only interested in the sustainable development of the nation’s agricultural sector and has taken verifiable steps to ensure that.

In the statement, the company said, “Notore believes that there should be favourable policies that will allow the private sector embark on the importation and manufacture of fertilisers.  “As you know, the setting up of fertiliser plants requires huge investments, and this will only be possible if the investor realises that the conditions will be favourable enough for him to recover his investment.

“Once the enabling policies are pronounced and the conditions are attractive enough, investors will be willing to put down the required funds to build the fertiliser plant.”

The company said it produced 116,109 metric tonnes of ammonia and 69,410 metric tonnes of urea in 2010 and has produced 83,588 metric tonnes and 143,348 metric tonnes of ammonia and urea respectively thus far in 2011.  However, the Fertiliser Stakeholders of Nigeria had accused Notore of leading a cartel intent on seizing the entire fertiliser market in the country.

The group claimed that the fertiliser manufacturers were allegedly the leaders of a grand design by a cartel to take over the Federal Ministry of Agriculture to the detriment of the nation.

“We feel greatly concerned because of the likely danger this plan poses to the food security of the nation and the programme to attain self reliance in food production.

“It is imperative to state for better understanding that last year, this company (Notore) was awarded the contract to supply 120,000 metric tonnes of fertiliser, which was the largest quantity that was awarded to a single company by the Federal Ministry of Agriculture.

“It could only supply 29,000 metric tonnes, which represents 24 percent of the total awarded it,” the group said in the advertorial.

Similarly, the group alleged that the Federal Super Phosphate Company, which also was awarded a contract to supply 30,000 metric tonnes to the ministry last year, could not deliver the supply.

Both firms, the group claimed, had approached the minister, Dr. Adesina, to be made the sole suppliers to the federal government again, even though they had failed to meet their delivery targets last year.

It added that it is glaring that Notore and Federal Super Phosphate lack the capacity to perform.

“So to allow the companies to progress with this plan portends danger of a fertiliser crisis, as farmers will not see it to buy.”

But Notore maintained that it has just concluded a successful scheduled maintenance operation of its Onne plant, which has improved the reliability of the plant, making it able to produce at over 90 percent nameplate capacity of 500,000 metric tonnes of granular urea annually.