17 October 2023
By: Gerrit Bezuidenhout
Logistics bottlenecks, harsh weather and issues with phosphoric acid supply could pose a significant threat to farmers who were complacent about fertiliser prices and orders when the summer rains began to fall.
A perfect storm of lower imports, logistical delays and port issues sets the stage for potential fertiliser shortages later in the season.
Hinterland, Senwes’ retail network, warned farmers a month ago to buy fertiliser in time to avoid potential shortages at planting time, as fertiliser imports in June were 40% lower than in June 2022.
“With a better season, we saw farmers having better cash flow, allowing them to wait and see how input prices would react,” says Dr Pieter Haumann, CEO of the Fertiliser Association of Southern Africa (Fertasa).
“There was also a larger-than-expected grain harvest, and with a strong carryover stock farmers could explore commodity prices before selling. These two factors led to the postponement of fertiliser orders. However, global demand has recently driven fertiliser prices up again, and with planting season approaching it is time to order fertiliser.”
Haumann says there have been minor shortages of specific products but they have not been of such a nature that farmers need to be concerned about availability.
By planting time, rain over parts of the summer production area had not been widespread enough for farmers to take their planters out of the shed everywhere, meaning orders have not sharply increased yet. However, this could change if there is more widespread and substantial rainfall.
Adversity at state enterprises
Stormy weather and dangerous sea conditions prevented ships carrying monoammonium phosphate (MAP) from unloading at Durban harbour over the past few weeks.
“The sea swells were too high, and with the onshore flow resulting in large waves, the ships had to leave the harbour,” said a source who requested anonymity when speaking to African Farming.
“After that, the dock stood empty for 15 hours before the ships could return. This meant the equipment for unloading and transportation had to be brought back, leading to further delays.”
Furthermore, the state-managed phosphorus manufacturer Foskor, which made a profit this year for the first time since 2012 and is showing signs of improvement, was forced to remove all the ammonia from its plant in Richards Bay after a devastating sawdust fire broke out in the harbour on September 30.
“The risk of an explosion was just too high,” says Corné Louw, head of applied economics and member services at Grain SA.
Foskor has long been plagued by complaints of underproduction, but state enterprises such as Eskom and Transnet play a role in this, according to Louw.
“For example, the 5km railway from the harbour to Foskor’s plant, owned by Transnet, is not in usable condition. The company must use alternative means of transportation to obtain and process ammonia and sulphur.”
Road transport cannot carry enough heavy material to make this method economically viable. Moreover, the road infrastructure will also suffer greatly.
“The only solution is for Transnet to pull up its socks and repair the railway. Add to that Eskom’s ongoing problems, and Foskor, which has prioritised renovations lately, is fairly handicapped in obtaining and processing raw materials.”
The issues at Foskor are evident from the number of shipments the company can dispatch. “One of the major fertiliser companies in the country needs about 13 shipments of phosphoric acid a day and they get one shipment from Foskor.”
Minimal imports
Comparative figures show fertiliser imports were 40% lower in June than a year earlier. Figures for August were not yet available at planting time.
“It is definitely a combination of circumstances,” says Louw. “Much of the fertiliser industry’s success also lies in its purchases and the timing of purchases, and because prices were so volatile, many fertiliser companies waited until prices reached a low point at the end of June and beginning of July, after which demand increased again.
“Since we have to import so much of our demand, it was perhaps a bit short notice, especially given weather conditions that didn’t cooperate. Price trends also played a role, and with the nature of the fertiliser industry, where a misstep can lead to severe losses, the timing wasn’t entirely accurate.”
Louw says the most important thing that needs to happen now is for shipments of MAP to be unloaded urgently. “The first ship was unloaded (in the week of October 6) and the next ship with MAP has also arrived. Grain SA is in negotiations with the harbour authorities to give priority status to the ship.”
The harbour usually unloads ships in the order they enter. “So, we are explaining how important it is that this ship must be unloaded.”
Despite the hurdles facing the fertiliser industry, Louw believes farmers’ needs will be met. “Our input industry is so sophisticated and robust that, even though there are many red flags, the companies will make it work. We have been in this situation before and the industry has provided.”
