Egypt considers 30% hike in subsidized fertilizer prices amid economic pressures
EGYPT — The Egyptian government is contemplating raising the price of a ton of subsidized fertilizer to 6,250 pounds (US$129), marking a 30 percent increase from the current rate of 4,800 pounds.
This information was reported by Asharq on July 22, citing an anonymous source close to the government.
Egypt, known for having the highest level of fertilizer use in Africa, is currently facing a significant pressure on its fertilizer market due to a shortage of natural gas.
This shortage has resulted in increased production costs for fertilizer manufacturers, who have been advocating for a price hike to offset these rising expenses.
According to industry insiders, producers are currently incurring substantial losses, as they are forced to sell their products to the Agriculture Ministry at approximately 48% of their production cost.
The shortage of natural gas has also led to operational disruptions within the industry. Several petrochemical plants temporarily closed in June, and on June 27, Abu Qir Fertilizers, one of Egypt’s leading fertilizer suppliers, announced it was partially switching to hydrogen to maintain operations.
Under current regulations, the Egyptian government mandates that fertilizer suppliers allocate 55% of their production at subsidized prices to the Ministry of Agriculture.
This requirement has exacerbated financial pressures on producers, leading to significant losses. Sources close to the industry reported on July 18 that local manufacturers are recording losses of about 4,000 pounds (US$82.6) per ton of fertilizer delivered to the government.
The last adjustment to the price of subsidized fertilizers occurred in November 2021, when the government raised the price by 50% to 4,500 pounds per ton.
The current proposed increase aims to alleviate suppliers’ burden by aligning subsidized prices more closely with rising production costs.
The impact of these economic challenges, however, extends to agricultural producers as well. In the local market, fertilizer prices have surged dramatically over the past month.
Official data indicates that the price of a ton of fertilizer increased by 54% in June, reaching 20,000 pounds (US$413), compared to around 13,000 pounds (US$268) in May 2024. This sharp increase poses a risk to the long-term sustainability of agricultural production in the country.
According to the World Bank, Egypt’s heavy reliance on fertilizers is underscored by its consumption level, which stood at 542.6 kg of fertilizer per hectare of arable land in 2021.
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