Massive fertilisers subsidy as govt eyes agri reforms

Massive fertilisers subsidy as govt eyes agri reforms

MINISTER for Agriculture Hussein Bashe yesterday tabled the 751bn/- budget for the ministry’s 2022/2023 financial year by outlining programmes and projects aimed at reforming the agriculture sector.

Featuring prominently in the budget is the allocation of 150bn/ to specifically subsidize fertilizer prices. According to the minister, the decision seeks to enable farmers in the country to get access to the agricultural inputs at affordable prices.

“It is better for the ministry not to engage in any other activity or programme in the next financial year, but ensure fertilizers are available for farmers in the county,” Mr Bashe told the august House.

He said the post Covid-19 effects and the ongoing war between Ukraine and Russia have pushed up the fertilizer prices in the world. Giving evidence, Bashe said DAP fertilizer price has skyrocketed from 310 US dollars per tonne in 2020 to 1,012 US dollars this year, an increase of 226 per cent.

UREA price has surged from 251 US dollars per tonne in 2020 to 1,214 US dollars per tonne this year, equivalent to 384 per cent increase.

According to the minister, the system to be used in providing the subsidy will be explained when the Minister for Finance, Dr Mwigulu Nchemba will be tabling the main government budget on June 14, 2022.

However, he cautioned that the subsidy arrangement will not be permanent, instead it will be issued seasonally, especially as world events cause unexpected imported inflation, affecting the country’s economy.

He said to address the effects of the rising fertiliser prices the ministry will strengthen the subsidy provision system for all crops by reviewing the procedures for registering agricultural input agents and companies.

In the course, the minister ordered all companies engaging in fertilizer business and the agricultural input producing industries to register themselves with Tanzania Fertiliser Regulatory Authority (TFRA) by May 31, 2022 to simplify the disbursement and management of the subsidy.

According to the minister, the ministry will register all fertiliser distributors and their points of sale. The subsidized fertilizer will have their bags marked with a barcode and a special label to differentiate it with unsubsidized fertilisers in the market.

“ The government will not hesitate to forfeit the license of any company that will not implement these directives,” the minister warned, insisting that the subsidy scheme is planned to give priority to local fertilizer producing firms with the objective of protecting local industries, employment and safeguarding the country’s security.

The minister said the government will continue attracting investors to invest in fertilizer production, including completing the construction of fertilizer industry in Dodoma, owned by Intracom from Burundi, with the capacity to produce 600,000 tonnes per annum.

He said the ministry in collaboration with other institutions in the government searches for incentives to enable Minjingu Mines and Fertiliser Limited to increase the production capacity from the current 100,000 tonnes per to 300,000 tonnes per year.

He said talks are going on between the Ministry of Agriculture and Ministry of Finance and Planning for the establishment of UREA producing industry in Kilwa, Lindi region, a plant that is expected to run on gas. According to Bashe, TFRA will, in the next financial year, coordinate the importation of 650,000 tonnes of fertiliser for farmers.

He said the ministry will review the Tanzania Fertilizer Company (TFC) Act so that it can run itself commercially.

Strategies to increase production of edible oil producing crops in the country are also outlined in the budget. Outlining other programmes geared to reform agriculture, the minister said the government will, in the next financial year, focus on building a strong foundation so that the sector can register a 10-per cent growth by 2030.

To be able to achieve the objective, the minister said, the country must be food-self-sufficient, including producing surplus for export and turning some food crops into cash produce. He said by 2030 the value of crop exports must increase from 1.2 billion US dollars to 5 billion US dollars.

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