The ongoing geopolitical tension between Russia and Ukraine continues to negatively affect fertiliser prices, a situation the Reserve Bank of Malawi (RBM) warns could affect the 2022/23 agriculture season.
Figures contained in the RBM March 2021 Market Intelligence Report show that Di-ammonium Phosphate (DAP) fertiliser edged up by 25.6 percent to $938.1 (about K773 932.5 ) per metric tonne (MT) in March 2022, from $747.1 (about K616 357.5) per MT in the preceding month and $699.4 (about K552 255 ) per MT in January 2022.
The RBM has since indicated the trend could adversely affect inflation.
Reads the report in part: “At the current trend, access to fertilisers could be a challenge during the 2022/23 agriculture season and may adversely affect production, thereby fuelling supply-induced inflationary pressures.
“At the same time, sustaining the Affordable Inputs Programme [AIP] under the current circumstances will exert pressure on the fiscal budget as well as foreign exchange reserves, both of which are inflationary risks.”
Meanwhile, government has not yet indicated how it will handle the 2022/23 AIP in view of the rising fertiliser prices.
The prospects are, therefore, not good as the Ministry of Finance and Economic Affairs had allocated K109 billion to AIP in the 2022/23 National Budget, which is K32 billion less than what was allocated in the previous financial year.
Agricultural policy think-tank, Mwapata Institute executive director William Chadza recently proposed that the AIP reforms focus on trimming the number of beneficiaries and not stretching the farmers’ contribution.
He said in a recent interview: “The option of increasing the budget is already creating a very big fiscal burden. It is unlikely that there will be extra resources to increase the budget of the programme.”
Agriculture policy commentator Tamani Nkhono Mvula earlier argued that the global economic factors leading to the rise in fertiliser prices speak volumes on the need for the country to consider local production.
He said: “One of the biggest issues in the fertiliser sector in Malawi is the issue to do with logistics and timeliness of fertiliser to reach the country, taking into consideration that we are a landlocked country and affected by what is happening in the world.
“For instance, currently much of our fertiliser comes from Russia and the Middle East. Now with what is happening in Russia, obviously, we are going to have challenges with supply of fertiliser.”
Spot-checks show agro-dealers are selling a 50-kilogramme bag of Urea at K49 000 and CAN costs at K47 000. Super D is selling at K62 700 while Compound D fetches K52 700.