1. Fertiliser Policy in East and Southern Africa. Perspective of the South African Fertiliser Industry Adam Mostert CEO: Fertilizer Society of South Africa www.fertasa.co.za 6 February 2014

2. SA Fertiliser Industry History 1666 – Guano - first shipment from the nearby islands to the Western Cape 1890 – first import of inorganic fertiliser 1903 – SAFCO near Durban – phosphate production from bones 1919 – Kynoch – first Nitrogen fertilisers 1953 – Omnia – agricultural lime www.fertasa.co.za

3. History SA Fertilizer Industry 1960s – Foskor, Sasol, Iscor, Fisons, Windmill, Bosveld 1967 – Triomf NPK factory in Potchefstroom 1967/68 – Omnia fertiliser factory Sasolburg 1983 – Sasol direct marketing to farmers 1980s till 2005 – Rationalisation of the industry – mergers, acquisitions and divestitures www.fertasa.co.za

4. Lifting of Price Control Severe drought – recession Withdrawal of marginal land Stage 3: GrowthStage 4: Maturity

5. www.fertasa.co.za

6. Current state of Agriculture Average fertiliser use by country in SSA for 2002-2009 (excl. SA) (kg of fertiliser nutrients* per ha of arable and permanent cropland) * Nitrogen (N), Phosphates (P205), Potash (K20) Source: FAOSTAT (2010)

7. Structure of the Industry in RSA Completely free market – no protection Strict Competition Legislation – encourages competition Nitrogen production (NH 3 from Sasol) –RSA roughly balanced on N trade –All urea is imported Phosphate production (Foskor) –RSA is a net P exporter Potash – everything is imported Roughly 45 fertiliser companies & 70 blenders – dry blends and liquids www.fertasa.co.za

8. Grasland Ondernemings Industrial Commoditiess Holdings Members of the FSSA - 2014

9. Services offered by the Industry Agronomists on farm – fertiliser recommendations Soil sampling and testing – AgriLASA Plant tissue analysis Precision farming Remedial blends & specialities www.fertasa.co.za

10. Trade in Southern Africa www.fertasa.co.za

11. Purpose of Agri-input Policy “To achieve economic growth and poverty reduction by enhancing the productivity and profitability of agriculture through the development of the agricultural input sector” United Nations Economic Commission for Africa Southern Africa Office www.fertasa.org.za

12. Fertiliser Policy Constraints (excluding South Africa) Unhealthy government involvement in the fertiliser market Procurement and distribution done by government Limited or unsuitable product range – not what is required Subsidies resulting in distortion of market prices High transport and distribution costs Late delivery of product because of slow procurement processes Bottlenecks between imports and farm gate The above lead to: Low application rates – inefficient use of fertiliser Depletion of plant nutrients in soil - low yields, low profitability Discouragement of private sector participation

13. Fertiliser Policy Interventions Design policies according to the development stage of agricultural input systems of the country (IFDC model) Supply Side Encourage development of the private agricultural input sector Develop infrastructure to support the full supply chain for inputs Create and maintain an efficient regulatory system – quality control Free trade of fertiliser between countries in a region – border posts Allow free imports of fertilisers – no licenses, no duties Encourage lower cost of marketing and distribution Encourage local production of fertilisers utilising local raw materials where possible Eradicate corruption

14. Fertiliser Policy Interventions Design policies according to the development stage of agricultural input systems of the country (IFDC Model) Demand Side Create a demand and market for agricultural produce and allow market forces to determine prices: higher income for the farmer = buying power for inputs = higher application rates = increase in yield = increase in production = increase in income = increase in fertiliser demand Encourage collaboration between commercial and small scale farmers Do applied soil fertility and plant nutrition research Provide or support soil laboratory services Provide agronomic and economic advisory services!!!!!!

15. Conclusions Governments must allow the private sector to approach the fertiliser market as a business and allow the fertilizer industry to develop to the potential of the country. The role of government is to provide the environment in which the private sector can do their business in an efficient and productive manner. The objective remains: “ To achieve economic growth and poverty reduction by enhancing the productivity and profitability of agriculture through the development of the fertiliser sector”

16. Thank you Questions? Confidential

17. Factors limiting fertiliser use in Africa Availability of finance and credit Grain prices crash in good season Unavailability of improved (GM) seed cultivars Weak physical infrastructure Delays in input distribution beyond recommended application dates Poor fertiliser use efficiency due to poor agronomic management practices Private sector participation in input distribution often limited due to the high risk; Market failure – retailer infrastructure