Adam Mostert CEO: Fertilizer Society of South Africa

1. FertiliserPolicy in East and Southern Africa.Perspectiveof the South African FertiliserIndustry • 6 February 2014 Adam Mostert CEO: Fertilizer Society of South Africa www.fertasa.co.za

2. SA Fertiliser Industry History • 1666 – Guano - first shipment from the nearby islands to the Western Cape • 1890 – first import of inorganic fertiliser • 1903 – SAFCO near Durban – phosphate production from bones • 1919 – Kynoch – first Nitrogen fertilisers • 1953 – Omnia – agricultural lime www.fertasa.co.za

3. History SA Fertilizer Industry • 1960s – Foskor, Sasol, Iscor, Fisons, Windmill, Bosveld • 1967 – Triomf NPK factory in Potchefstroom • 1967/68 – Omnia fertiliser factory Sasolburg • 1983 – Sasol direct marketing to farmers • 1980s till 2005 – Rationalisation of the industry – mergers, acquisitions and divestitures www.fertasa.co.za

4. Stage 3: Growth Stage 4: Maturity Lifting of Price Control Severe drought – recession Withdrawal of marginal land www.fertasa.co.za

5. www.fertasa.co.za

6. Current state of Agriculture Average fertiliseruse by country in SSA for 2002-2009 (excl. SA) (kg of fertilisernutrients* per ha of arable and permanent cropland) * Nitrogen (N), Phosphates (P205), Potash (K20) Source: FAOSTAT (2010)

7. Structure of the Industry in RSA • Completely free market – no protection • Strict Competition Legislation – encourages competition • Nitrogen production (NH3 from Sasol) • RSA roughly balanced on N trade • All urea is imported • Phosphate production (Foskor) • RSA is a net P exporter • Potash – everything is imported • Roughly 45 fertiliser companies & 70 blenders – dry blends and liquids www.fertasa.co.za

8. Members of the FSSA - 2014 Grasland Ondernemings Industrial Commoditiess Holdings

9. Services offered by the Industry Agronomists on farm – fertiliser recommendations Soil sampling and testing – AgriLASA Plant tissue analysis Precision farming Remedial blends & specialities www.fertasa.co.za

10. Trade in Southern Africa www.fertasa.co.za

11. Purpose of Agri-input Policy “To achieve economic growth and poverty reduction by enhancing the productivity and profitability of agriculture through the development of the agricultural input sector” United Nations Economic Commission for Africa Southern Africa Office www.fertasa.org.za

12. Fertiliser Policy Constraints(excluding South Africa) • Unhealthy government involvement in the fertilisermarket Procurement and distribution done by government • Limited or unsuitable product range – not what is required • Subsidies resulting in distortion of market prices • High transport and distribution costs • Late delivery of product because of slow procurement processes • Bottlenecks between imports and farm gate • The above lead to: • Low application rates – inefficient use of fertiliser • Depletion of plant nutrients in soil - low yields, low profitability • Discouragement of private sector participation

13. Fertiliser Policy Interventions Design policies according to the development stage of agricultural input systems of the country (IFDC model) Supply Side • Encourage development of the private agricultural input sector • Develop infrastructure to support the full supply chain for inputs • Create and maintain an efficient regulatory system – quality control • Free trade of fertiliser between countries in a region – border posts • Allow free imports of fertilisers – no licenses, no duties • Encourage lower cost of marketing and distribution • Encourage local production of fertilisers utilising local raw materials where possible • Eradicate corruption

14. Fertiliser Policy Interventions Design policies according to the development stage of agricultural input systems of the country (IFDC Model) Demand Side • Create a demand and market for agricultural produce and allow market forces to determine prices: higher income for the farmer = buying power for inputs = higher application rates = increase in yield = increase in production = increase in income = increase in fertiliser demand • Encourage collaboration between commercial and small scale farmers • Do applied soil fertility and plant nutrition research • Provide or support soil laboratory services • Provide agronomic and economic advisory services!!!!!!

15. Conclusions • Governments must allow the private sector to approach the fertiliser market as a business and allow the fertilizer industry to develop to the potential of the country. • The role of government is to provide the environment in which the private sector can do their business in an efficient and productive manner. • The objective remains: “To achieve economic growth and poverty reduction by enhancing the productivity and profitability of agriculture through the development of the fertiliser sector”

16. Thank you Questions? Confidential