In a meeting set to be held on Tuesday, the ministers of investment, industry, and agriculture will examine the negative consequences of the increase in fertiliser prices and discuss ways to compensate farmers, according to head of the Authority Affairs Sector at the Minister of Agriculture’s office Aly Ismail.
Minister of Investment Ashraf Salman told Daily News Egypt that the government is considering three possible methods for compensating farmers for the increase in fertiliser prices: first, cash support equivalent to the price increase value; second, purchasing fertilisers from plants and distributing supplies to farmers at subsidised prices; and third, purchasing crops at prices that allow for a profit margin for farmers.
“The cabinet was not able to settle on one specific scenario for approval. Consultations are still ongoing for these three scenarios, as well as other methods,” Salman said.
The government raised the price of supplying fertilisers from factories to EGP 100 for a bag of urea fertiliser and EGP 95 for a bag of nitrate fertiliser amid government efforts to rescue a sector that has been hit hard by a shortage of gas supplies. As a result of the fuel crisis, some plants have completely halted production.
Ismail claimed that an unsigned agreement was made during discussions with fertiliser plants last week to produce a government-set total – between all the companies – of 350,000 metric tonnes of fertiliser per month for the domestic market. The government pledged to supply the agreed upon amounts of natural gas in full.
Ismail stressed that the ministry would not tolerate failure from the companies to provide the agreed upon quantities, explaining that there should be consistency in the quantities of gas obtained by fertiliser plants and the quantities of fertiliser supplied to the local market.
However, fertiliser companies are refusing to approve the amounts set by the Ministry of Agriculture, saying that the figures represented significant levels of production and will negatively affect their ability to carry out export contract obligations.
A source from the AlexFert Company said that the company submitted a formal memorandum to the Ministry of Agriculture refusing to supply 35,000 tonnes per month at the new price of EGP 1,910 per tonne.
The source added that the quantities required by the ministry are equivalent to 70% of production if 100% of the company’s gas requirements are met.
He added that company production before the shortage of gas crisis reached 50,000 tonnes per month, 17,000 of which were supplied to the Ministry of Agriculture and the rest exported. The source explained that EGAS [Egyptian Natural Gas Holding Company] ceased to supply gas to the plant approximately one week ago.
He pointed out that the company informed the ministry of their refusal to supply the stipulated quantities through an official memorandum due to implementation difficulties. The company has requested that the government reconsider the specified quantities.
A source from the Misr Fertilisers Production Company (MOPCO) said that the quantities set by the ministry for his company entail supplying 35,000 tonnes per month, which amounts to 35% of production.
The source stated that plant was set up to export 90% of its production abroad and only 10% to the local market, adding that the quantities requested by the ministry will make the company unable to adhere to its export contract obligations and lead to significant losses and penalties.