Rwanda government has started working on a new mechanism for fertilizer rationing, access and distribution following concerns that global fertilizer prices are sharply rising.
“In a bid to respond to rising prices for industrial fertilizers on the international market, Ministry of Agriculture is finalising new guidelines for sell of industrial fertilizers,” Rwanda Ministry of agriculture said on Tuesday.
More than 80% of Rwanda’s population are engaged in agriculture. Thus fertilizer price fluctuations can have significant impact on farmer incomes and food security.
Rwandan farmers mostly use a variety of fertilizers— Diammonium phosphate (DAP), nitrogen fertilizers including NPK (17‐17‐17), and Urea for staple crops and NPK (25‐5‐5) and NPK (20‐10‐10), for cash crops.
According to centre for agriculture profitability at the Institute of Agriculture and Natural resources at University of Nebraska, fertilizer prices are forecast to continue increasing globally.
Nitrogen costs have already been high throughout the 2020 production season yet the market size is predicted to continue growing.
The global Industrial Nitrogen Market was sized at $14 billion 330 million in 2020 and is anticipated to be at a worth of $20 billion 410 million by 2027, with a Compound Annual Growth Rate (CAGR) of 4.7% during this time frame.
This is directly attributed to rising demand in emerging markets and long-term supply concerns.
The study conducted by Schnitkey et al., (2021), revealed that fertilizer prices were U$746 per ton for anhydrous ammonia, U$717 per ton for Diammonium Phosphate (DAP), and U$600 per ton for potash on July 29, 2021, which were considerably higher values than in 2020 at the same time.
In the breadth of a year, anhydrous ammonia increased by 53%, U$487 per ton in 2020 to U$746 per ton in 2021; DAP increased by 83%, U$390 per ton in 2020 to U$717 per ton in 2021, which is its highest price since 2008; and potash increased by 71%, U$350 per ton in 2020 to U$600 per ton in 2021 (Schnitkey et al., 2021. Prices are likely to stay high, given the strong demand for and cost of energy resources.