HomeBusiness DigestFertiliser firms lose out as forex crisis deepens

Fertiliser firms lose out as forex crisis deepens

ZIMBABWE’S fertiliser manufacturers have lost significant production time as they await foreign currency allocations from the central bank to import raw materials critical in their operations, an official has told businessdigest.

By Tinashe Kairiza

The country, battling an acute shortage of foreign currency, arranged for a US$56 million loan facility with the Africa Import and Export Bank (Afreximbank) last month to procure raw materials needed to manufacture fertiliser.

But outside the Afreximbank support facility, Zimbabwe would still require an additional US$60 million to manufacture adequate stocks of fertiliser to meet demand for this summer cropping season.

The country requires an estimated 400 000 tonnes of fertiliser for a successful cropping season.

Zimbabwe Fertiliser Manufacturers’ Association (ZFMA) chairperson Alvin Mashingaidze said manufacturing companies were lagging behind to produce stocks that would satisfy demand.

He said even with adequate foreign currency now, manufacturing companies had already lost months in potential production time.

“We lost a lot of production time as manufacturers of fertiliser waited for foreign currency allocations to purchase raw materials. Without foreign currency there is little that we can do. We do not have the ability to finance raw materials.

“The industry has capacity to produce but the only constraint is to purchase raw materials on time. So there is limited activity going on at the moment. Imagine you have to wait for four months only to start getting allocations in August,” Mashingaidze said, noting that fertiliser companies have capacity to satisfy demand if they have adequate raw materials.

ZFMA is constituted by companies that include Zimbabwe Fertiliser Company, Omnia, Windmill and Sable Chemicals.

As the country struggles to raise sufficient foreign currency to import raw materials, fertiliser prices this week shot up with a 50-kilogramme bag of Compound D now costing US$41, Urea US$35 and Ammonium Nitrate US$39.

The fertiliser industry is currently sitting on stocks estimated at about 100 000 tonnes.

Currently, over 100 000 tonnes of fertiliser stocks have already been absorbed by the market.

In the last two years, fresh capital investments have been made into additional fertiliser blending plants which have increased Zimbabwe’s capacity to manufacture to about 1,2 million tonnes, depending on the availability of raw materials.

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