Zimbabwe Fertilizer Makers Appeal for More Foreign Exchange
December 21, 2016
Elita Chikwati Senior Agriculture Reporter
Zimbabwe Herald
AN acute shortage of fertiliser is looming after producers failed to get enough foreign currency to import raw materials, the Parliamentary Portfolio Committee on Agriculture, Mechanisation and Irrigation Development heard yesterday. It also emerged that some fertiliser firms have raw materials and fertiliser in their warehouses held under a collateral management agreement, but can only be accessed after paying external suppliers.
The Herald has it on good authority that foreign suppliers had the active ingredients stocked in South Africa and Mozambique, waiting to be dispatched to Zimbabwe upon full payment.
The firms appealed to the Government to increase the amount of foreign currency allocation to enable them to meet their contractual obligations and all farmers have enough fertiliser.
Maize grown under the scheme is on different stages of growth, with the irrigated crop already above knee level. The committee visited Omnia Fertiliser Zimbabwe plant in Banket and ZFC Limited in Harare to assess challenges being faced by the industry.
Both companies said though Government prioritised them on foreign currency, the money was not enough to import critical materials. Committee chairman Cde Christopher Chitindi said he was happy that Government prioritised fertiliser production, but said the Reserve Bank of Zimbabwe should increase its offerings so that the companies could produce more.
“Compound fertilisers are now late. To date, ZFC has delivered only 20 000 tonnes of compound D, which is half of the target. We have also realised that contracts should be made early. For instance ZFC Ltd signed a contract on October 10 and this was rather late. Contracts should be signed early for early planning,” he said.
ZFC Ltd managing director, Dr Richard Dafana told the committee that the company required $6 million to complete their obligations under Command Agriculture. He said the company was not operating at full capacity because of foreign currency challenges, as they constantly run out of raw materials.
Dr Dafana said the industry started experiencing foreign currency challenges mid-year. “ZFC is on the top list of Government’s priority for foreign currency, but that does not mean we get the money we require. Recently, we received $100 000 from the Reserve Bank of Zimbabwe, but still, we cannot meet our requirements.
“Our suppliers used to give us raw materials on credit but as we started experiencing challenges, they also started rationing the materials. Now they only release the materials after payment. We have fertilisers in our stock but under the collateral management agreement, and we cannot use them as long as we have not made payments,” he said.
He said the company was also supplying other customers outside Command Agriculture, thereby stretching capacity.
“We are now producing from hand-to-mouth. Fertiliser companies should get the lion’s share on foreign currency especially now when we have an important cropping programme.
“It is best that priority is given to save the crop so that we do not end up importing food. We have high rainfall this year, which is favourable for crop production. We are afraid we may continue to produce the compound fertilisers when the nutrients will no longer be required by the crops,” he said.
Omnia finance director, Mrs Anne Munetsi, said the company was contracted by Government to provide 6 800 tonnes of Ammonium Nitrate and had already supplied 5 000 tonnes.
She said Omnia Zimbabwe was providing gas to Sable chemicals to enable production of the Ammonium Nitrate. “We have been experiencing challenges to access foreign currency to buy raw materials. All along, we never used to supply gas to Sable, but because of the current situation we have to assist,” she said.
Omnia Zimbabwe, which is wholly owned by South African company and funded by Omnia Mauritius, said it could not continue accessing raw materials as the funders required their money in 180 days.
“We also blend fertilisers, but the process is hampered by shortage of raw materials, as a result of foreign currency challenge. Our bins, which are supposed to have raw materials, are empty now and normally during this time of the year they would be full.
“We got a permit to import 4 000 tonnes of urea duty-free. This year has been tough for us as our local manufacturers of raw materials Zimphos and Sable Chemicals have not been operating at full capacity,” she said.
Omnia marketing manager, Ms Samkelo Moyo, said the company was also affected by the long period taken to renew import permits. “The permits expire and it takes long before they can be renewed and this also affects procurement of raw materials,” she said.
Farmers have planted 33 932 hectares of maize under the command agriculture scheme.
As of December 6, 135 260 hectares of land had been tilled and 33 932 ha planted, with 33 931 farmers contracted having received 76 percent of their maize seed supply, 38 percent of compound D, 3 percent of lime and 20 percent of fuel as at 6 December 2016.
The programme is targeted at subsidising imports and boosting national food security. Dr Dafana said talks of command agriculture started in May and at that time, the fertiliser industry indicated to Government then that it had 40 000 tonnes of compound D and 60 000 tonnes of top dressing for the 2016/17 farming season.
“We also indicated that the industry had the capacity to produce an additional 200 000 tonnes. We told Government we had to import nitrogen for manufacturing of ammonium nitrate,” he said.
He said after ZFC Ltd signed a contract on October 10, it was supposed to get 50 percent of the payment, but this did not come once, but came in tranches. ZFC is also supplying other private customers.
The company has 15 000 tonnes of nitrogen, but they have to pay for the release since it is under collateral management agreement. “Suppliers have the raw materials in South Africa and Mozambique, waiting for the payments and will only release after payments,” he said.
Elita Chikwati Senior Agriculture Reporter
Zimbabwe Herald
AN acute shortage of fertiliser is looming after producers failed to get enough foreign currency to import raw materials, the Parliamentary Portfolio Committee on Agriculture, Mechanisation and Irrigation Development heard yesterday. It also emerged that some fertiliser firms have raw materials and fertiliser in their warehouses held under a collateral management agreement, but can only be accessed after paying external suppliers.
The Herald has it on good authority that foreign suppliers had the active ingredients stocked in South Africa and Mozambique, waiting to be dispatched to Zimbabwe upon full payment.
The firms appealed to the Government to increase the amount of foreign currency allocation to enable them to meet their contractual obligations and all farmers have enough fertiliser.
Maize grown under the scheme is on different stages of growth, with the irrigated crop already above knee level. The committee visited Omnia Fertiliser Zimbabwe plant in Banket and ZFC Limited in Harare to assess challenges being faced by the industry.
Both companies said though Government prioritised them on foreign currency, the money was not enough to import critical materials. Committee chairman Cde Christopher Chitindi said he was happy that Government prioritised fertiliser production, but said the Reserve Bank of Zimbabwe should increase its offerings so that the companies could produce more.
“Compound fertilisers are now late. To date, ZFC has delivered only 20 000 tonnes of compound D, which is half of the target. We have also realised that contracts should be made early. For instance ZFC Ltd signed a contract on October 10 and this was rather late. Contracts should be signed early for early planning,” he said.
ZFC Ltd managing director, Dr Richard Dafana told the committee that the company required $6 million to complete their obligations under Command Agriculture. He said the company was not operating at full capacity because of foreign currency challenges, as they constantly run out of raw materials.
Dr Dafana said the industry started experiencing foreign currency challenges mid-year. “ZFC is on the top list of Government’s priority for foreign currency, but that does not mean we get the money we require. Recently, we received $100 000 from the Reserve Bank of Zimbabwe, but still, we cannot meet our requirements.
“Our suppliers used to give us raw materials on credit but as we started experiencing challenges, they also started rationing the materials. Now they only release the materials after payment. We have fertilisers in our stock but under the collateral management agreement, and we cannot use them as long as we have not made payments,” he said.
He said the company was also supplying other customers outside Command Agriculture, thereby stretching capacity.
“We are now producing from hand-to-mouth. Fertiliser companies should get the lion’s share on foreign currency especially now when we have an important cropping programme.
“It is best that priority is given to save the crop so that we do not end up importing food. We have high rainfall this year, which is favourable for crop production. We are afraid we may continue to produce the compound fertilisers when the nutrients will no longer be required by the crops,” he said.
Omnia finance director, Mrs Anne Munetsi, said the company was contracted by Government to provide 6 800 tonnes of Ammonium Nitrate and had already supplied 5 000 tonnes.
She said Omnia Zimbabwe was providing gas to Sable chemicals to enable production of the Ammonium Nitrate. “We have been experiencing challenges to access foreign currency to buy raw materials. All along, we never used to supply gas to Sable, but because of the current situation we have to assist,” she said.
Omnia Zimbabwe, which is wholly owned by South African company and funded by Omnia Mauritius, said it could not continue accessing raw materials as the funders required their money in 180 days.
“We also blend fertilisers, but the process is hampered by shortage of raw materials, as a result of foreign currency challenge. Our bins, which are supposed to have raw materials, are empty now and normally during this time of the year they would be full.
“We got a permit to import 4 000 tonnes of urea duty-free. This year has been tough for us as our local manufacturers of raw materials Zimphos and Sable Chemicals have not been operating at full capacity,” she said.
Omnia marketing manager, Ms Samkelo Moyo, said the company was also affected by the long period taken to renew import permits. “The permits expire and it takes long before they can be renewed and this also affects procurement of raw materials,” she said.
Farmers have planted 33 932 hectares of maize under the command agriculture scheme.
As of December 6, 135 260 hectares of land had been tilled and 33 932 ha planted, with 33 931 farmers contracted having received 76 percent of their maize seed supply, 38 percent of compound D, 3 percent of lime and 20 percent of fuel as at 6 December 2016.
The programme is targeted at subsidising imports and boosting national food security. Dr Dafana said talks of command agriculture started in May and at that time, the fertiliser industry indicated to Government then that it had 40 000 tonnes of compound D and 60 000 tonnes of top dressing for the 2016/17 farming season.
“We also indicated that the industry had the capacity to produce an additional 200 000 tonnes. We told Government we had to import nitrogen for manufacturing of ammonium nitrate,” he said.
He said after ZFC Ltd signed a contract on October 10, it was supposed to get 50 percent of the payment, but this did not come once, but came in tranches. ZFC is also supplying other private customers.
The company has 15 000 tonnes of nitrogen, but they have to pay for the release since it is under collateral management agreement. “Suppliers have the raw materials in South Africa and Mozambique, waiting for the payments and will only release after payments,” he said.
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