More support for fertilizer producers? The Madbouly government is currently mulling ways it can further support fertilizer players, boost production, and attract new investments to the sector, three government sources told EnterpriseAM. The end goal is to boost sector exports to meet rising global demand for fertilizers.

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Pricing remains an issue: Producers are once again asking for the state to increase the price of subsidized fertilizers in light of rising gas prices, the sources said, adding that the brief period this summer when factories had to halt production due to gas shortages resulted in some costly fines, which in turn increased production costs. Fertilizer producers want to price subsidized fertilizer at EGP 6k per ton up from EGP 4.5k at the moment — they also want higher export quotas.

IN CONTEXT- Subsidized fertilizer prices remain set administratively — leaving a clear gap with freemarket prices. This risks leakage of subsidized stock to the black market, an issue the Agriculture Ministry continues to battle.

The state’s plan: The government is looking into a plan that would divide production into three tranches — the smallest tranche will go to the Agriculture Ministry, which will supply the fertilizers to farmers at a subsidized rate, the second smallest tranche will be sold in the freemarket through public auctions, and the third and largest tranche will be earmarked for export.

In order to keep both producers and farmers happy, the Agriculture Ministry could start paying more for subsidized fertilizer, while still selling it to farmers at the subsidized rates with the Finance Ministry bearing the difference in prices, one of the sources said.

The quantities supplied to the Agriculture Ministry may shrink to 37-40% of companies’ production, which would still be enough to meet farmers’ needs, according to one source. At the moment, suppliers need to sell 55% of their supplies to the ministry — a quota they haven’t been able to meet due to production declines.

Nothing is set in stone: The government is still mulling all these scenarios and is yet to make a final decision.

A priority sector: The sector is under the government’s spotlight as it anticipates the entrance of new players, which will in turn boost production.

The government raised natural gas prices for factories starting 15 September and has directed all fertilizer-producing companies to sign a protocol that sets the quantities supplied to the Agriculture Ministry, freemarket, and export, according to a statement. While the statement didn’t provide any details regarding the gas price increase, EnterpriseAM earlier this week reported that the Oil Ministry will raise natural gas prices for factories by USD 1 per mn British thermal units (BTU).

Fertilizer companies are yet to be notified of the price hike or the new quotas, officials from three different fertilizer players told EnterpriseAM.

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