Source: Disaster looms in fertiliser industry | Herald (Opinion)

The Herald, January 3, 2015

Local fertiliser companies face collapse owing to duty-free imports from mostly South Africa and Zambia that have flooded the market.

At least 12 firms are importing duty-free fertilisers for resale.

Imported brands include Mushe Maize, Liquid Lime, Nitrex and other fertilisers for maize, tobacco, soyabeans, cotton and sugarcane.

Fertiliser industry spokesman Mr Misheck Kachere yesterday confirmed that the local fertiliser industry was under threat.

“There have been a lot of imports throughout the year. Some people are importing the commodity for resale because there is no duty charged.

“Fifty percent of fertilisers in this country are imported duty-free and this has affected local production. The local fertiliser industry is operating at 25 percent capacity utilisation.

“We have raised concern with the Confederation of Zimbabwe Industries and the Ministry of Agriculture, Mechanisation and Irrigation Development,” he said.

Mr Kachere said low demand for local fertilisers on the market was also affecting employment.

“We cannot just lay people off their jobs as we have to follow labour laws. The companies are suffering as they have to keep the people on the jobs. This is a long-term business,” he said.

He said the quality of fertilisers being imported was not superior to the local product.

Some of the imported fertilisers are of low quality, but are being sold at a similar price with the local ones.

Windmill marketing executive Mr Wilson Gopoza said his firm’s sales had been affected by imports.

“Our major concern is that farmers may be short-changed by buying imported fertilisers that are below specifications or whose specifications have not been independently verified, especially for sensitive crops like tobacco.

“We have adequate stocks for current demand and are supplying all farmers and corporates who have approached us. The critical issue is not how much stock is available, but rather how much funding is available because there is already an oversupply for the limited funding available to farmers and corporates. Windmill has the ability to supply over 300 000 tonnes of fertilisers per annum,” he said.

Mr Gopoza said increased capacity utilisation through limiting unnecessary imports will reduce unit production costs and consequently selling prices.

“Most of the fertilisers currently being imported can be produced locally. Government already has a programme to assist farmers. We believe the scope of this programme can be increased.

“If local companies go back to full production, they will become more competitive. The scope to go to full production is currently constrained by the presence of imports,” he said.

Economic analysts have always called for the protection of the local industry against imports to ensure economic growth.

LESSONS FOR TODAY

• Agricultural production is key to the nation’s food security. As such, the manufacture of agricultural products should not only be done locally, but also have rigorous quality control measures.
• The removal of duty on critical products may be a welcome move for consumers, but the reverse is also true. It can seriously hurt local industry and commerce, leading to massive job losses.
• Removal of duty and/or imposition of subsidies on critical products is good, but it can also compromise on quality. Sub-standard and fake products have flooded the market, to the detriment of the whole consumer chain.
• Intended beneficiaries of such noble gestures never get to benefit partly due to issues like corruption, nepotism and cronyism.