Fertiliser prices drop globally, rise locally
While fertiliser prices have in recent months been dropping globally, the case is different in Malawi.
A Market Intelligence report for December 2022 published by the Reserve Bank of Malawi (RBM) shows that Urea traded lower at $519.4 per metric tonne in December 2022 than $588.8 per metric tonne recorded in the preceding month and $890.0 per metric tonne for December 2021.
This represents an 11.8 percent drop between November and December 2022 and a 41.6 percent drop between December 2021 and December 2022.
“The average (Di- Ammonium Phosphate) DAP price for the last quarter of 2022 of $582 per metric tonne was also below that of the preceding quarter at $623 per metric tonne and $714.86 per metric tonne recorded in the last quarter of 2021,” the report reads.
In Kwacha terms, the development means that Urea prices dropped to K538,098 (at the current official exchange rate) per metric tonne, representing K26,904 per 50 kilogramme bag (minus other costs such as shipping and taxes among others) in December 2022.
However, prices of the commodity on the local scene have been rising from between K55,000 and K60,000 per 50 kg bag in November to between K70,000 and K75,000 currently for the same quantity.
Fertiliser Association of Malawi spokesperson Mbawaka Phiri said the global trend has not been reflected on the local scene because the current stock of fertiliser was purchased at an elevated price, months ago.
She said the situation has been exacerbated by persisting foreign exchange scarcity.
“Malawians will have to wait a little longer to benefit from the global price decline because even if this current stock is done, we will still cough more to order fertiliser as we are accessing the foreign exchange at ranges of K1,400 to K1,600 to a dollar. Unless the foreign exchange issue is resolved, it will take time for what is happening globally to reflect on the local scene,” Phiri said.
Speaking in an earlier interview, economist from Malawi University of Business and Applied Sciences Betchani Tchereni said scarcity of foreign currency drives prices of goods and services up.
“When foreign exchange is scarce and importers are accessing it at a higher rate, they peg their prices in line with that rate which makes prices of the imported goods to be higher,” Tchereni said.
Malawi is an agriculture-based economy.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.
