Local dealers want middlemen removed from fertilizer business

There are on-going efforts to link local dealers directly to manufacturers of fertilizers in Dar es Salaam as one of the ways to cut import costs and increase availability of the products to farmers. This development is an outcome of a recent visit to the Tanzanian port city by Rwandan dealers who want to have direct contact with manufacturers. The new deal could also see the number of fertilizer importers in the country increase from two to more than 10 by next year, according to officials of the International Fertilizer Development Center (IFDC), Rwanda. Apparently, Rwandan dealers are trying to foster and forge business partnerships with counterparts in Dar, including Export Trading Group Company, Louis Dreyfus Commodities Ltd and Yaha Fertilizers—all located in Dar. According to Martin Drevon, the Market Development and Value Chain Advisor at the Privatization of Rwanda’s Fertilizer Import and Distribution System (PReFER), the new development will play a critical role in forging links and business partnerships between fertilizer distributors with manufacturers and reduce the cost of doing business. “We are talking about a business link that will not only yield into partnership and reduce the cost of doing trade, but also increase the efficiency and availability of fertilizers to farmers. This will ultimately translate into increased agro productivity thus facilitating economic development,” Drevon said in an interview. Drevon also believes that the removal of the middle man along the supply chain will help expose agro dealers to expertise in agro businesses. “It will not only offer a unique business opportunity on how agro business is conducted along the value chain of supply but also create confidence amongst investors who wish to establish warehouses in the country.” The move could more than double the supply of fertilizers from the current 30,000 to about 60,000 tons by 2016 and increase profitability for both farmers and dealers. “Having dealers directly involved in the importation of fertilizers means supply at its full capacity, because these are the very people directly in touch with famers. They are equipped with the right information in terms of statistics and numbers. It’s therefore important that they get fully involved in the business of importing fertilizers,” said Viater Nsengumuvunyi, the chairman of a farmers’ cooperative in Kamunye. He said that issues of quality and quantity will rightly be addressed when middlemen are eliminated. “Most often fertilizer importers don’t want to know or even don’t care whether they are delivering on time or the quality of product they are bringing to the market is right. So, letting us take charge of this business will be a gold mine for every one along the chain.” Efforts to reach the two importers of fertilizers hit a snag as they were not willing to comment. Currently, the country imports three types of mineral fertilizers including urea, and NPK 17-17-17. These are mainly used in maize, rice, wheat and Irish potatoes farming. Statistics indicate that upon application, the ultimate yield production is between 3.5 and 4.0 tons per acre with a monetary value of about $800. This is twice higher than the typical yield without fertilizers. Donathile Kankesha, chairperson agro dealers Kicukiro district, said that the deal will make the business more competitive hence translating into streamlined services to farmers. “It is very important for farmers and agriculture as a sector if monopoly is kicked out of the business because it will improve on the quality of services.” Limited credit Meanwhile, experts have warned that limited access to credit by agro business could stiffle efforts to boost the industry. “Some agro-dealers continue supplying fertilizers to farmers in arrears, reinforcing the impression that fertilizers need not be paid for or that fertilizers are a gift from the government. While it is very imperative to initiate and develop knowledge about international fertilizer markets and supply chain management, it’s also very important that banks get involved in scaling up credit to this sector,” a source who requested to speak anonymously said. According to Jean de Dieu Dushimimana, the Rwanda Agriculture Board crop intensification programme extension and mobilisation officer, application of fertilizers has since increased from 5kg of inorganic fertilizer usage per hectare to 30kg per hectare and is projected to reach 45kg.