The price of ammonium nitrate is set to drop significantly

THE retail price of top dressing fertiliser, otherwise known as ammonium nitrate (AN), will drop significantly after duty on ammonia gas — a key ingredient in the manufacture of fertilisers — was suspended with immediate effect.
This was in response to a request for duty exemption on the product by Sable Chemicals, the sole manufacturer of AN, which operates from Kwekwe.
Ammonia gas is the raw material in the production of AN.
Sable applied for the suspension of duty on the basis that the country would be able to save scarce foreign currency by importing ammonia and converting it to AN as opposed to bringing into the country the finished product.
For every tonne of imported ammonia gas, Sable produces two tonnes of AN fertiliser.
The net effect of Statutory Instrument (SI) 54 of 2017, which suspended duty on ammonia gas, is that it would significantly lower the price of bringing the product into the country, translating into a lower unit cost for producing the AN fertiliser.
Certainly, this comes as good news to local farmers, who are always at odds with government over poor producer prices, especially for maize.
Sable Chemicals’ chief executive officer, Bothwell Nyajeka, was elated about the development.
It will immediately translate into a 15 percent reduction Sable’s costs of production, which could filter down to farmers.
If retailers were to cascade the 15 percent reduction in production costs to consumers, the retail prices of AN fertiliser should go down to about US$595 per tonne or US$30 per 50 kilogramme bag.
Farmers had a tough time during the 2017/18 cropping season trying to access fertiliser, which was in short supply.
The product also came at a high price of US$38 per 50kg bag, slightly up from the 2016/17 season when AN fertiliser would fetch US$37 per 50 kg bag.
Capacity utilisation at Sable is also expected to go up from the current 40 percent to 90 percent.
“Let me point out that Sable Chemicals does not sell ammonium nitrate fertiliser directly to the end user, the farmer. Ammonium nitrate is sold to farmers through our distributors who include ZFC, Windmill and Omnia. The price of fertilisers to the farmers, therefore, depends on the distributor selling prices. However, on average the cost of production at Sable Chemicals will come down by an average of 15 percent,” said Nyajeka.
In recent years, Zimbabwe has had to resort to importing fertilisers from overseas countries like India, Belarus and Brazil to feed starved market as local manufacturers failed to meet demand due to the country’s poorly performing economy.