Gov’t. First Year Review: Gov’t Moves to Curtail Spikes in Fertiliser Prices

Efforts by the Government, aimed at enhancing agricultural productivity and output by the nation’s farmers, met upon challenges resulting from spiralling hikes in the cost of fertiliser on the global market, which influenced movement in local prices.
In January, the administration, only four months into its first term in office, was forced to implement measures to cushion the impact of costs, which Minister of Agriculture, Dr. Christopher Tufton informed, had increased some five times over the preceding 12 months. He reported then, that the increases ranged between 45 and 70 per cent, and were attributable to spikes in the cost of imported raw material used to manufacture fertiliser.
In light of this, $70 million was provided to subsidise the cost of fertiliser sold to farmers by distributors. The sum was part of a $100 million allocation to the agricultural sector, which saw $30 million going towards boosting livestock production.
Speaking at a media briefing at Jamaica House in January, Dr. Tufton said the subsidy was a combination of $50 million from a $500 million Government provision to cushion the effect of price increases on consumers, plus $20 million from the Ministry’s resources. He said this provision was expected to provide relief to farmers over a three-month period, until the end of the 2007/08 fiscal year in March, when the matter would be reviewed, pointing out that “providing subsidies was not the long-term solution.”
The Minister indicated then that a reduction in fertiliser cost, amounting to approximately 10 per cent, was anticipated, with the average prices expected to be in the region of $2,000 per bag.
Consequent on the subsidy’s expiration, and in the face of continued spikes in global and local prices, the administration had to resort to providing another subsidy in July, the second in six months. Dr. Tufton announced that $50 million would be provided to assist small farmers specifically.
Prime Minister, Bruce Golding, who was away attending a meeting of leaders of PetroCaribe countries, in Venezuela, advised on his return, that information garnered, revealed that some countries were able to import fertiliser at a cheaper cost than the price the commodity was being sold for locally.
In an address to Parliament, Mr. Golding said that arising out of the PatroCaribe Summit, the state-owned Venezuelan company, Petroquimica, had undertaken to provide a five per cent discount on the price of urea, an ingredient used to make fertilizer. He added that the Venezuelan Government had also agreed to make an annual provision of 100,000 tonnes of the product, available to PetroCaribe member states, at a discounted price of 40 per cent of prevailing market price.
The Prime Minister said then, that the Government would import 25,000 tonnes of fertiliser from Venezuela, which would be available to farmers at significantly reduced prices.
Speaking at the Denbigh Agricultural and Industrial Show in Clarendon on August 3, Mr. Golding said the fertiliser is expected in the island by the end of September.
The Prime Minister contended that the exorbitant price at which fertiliser is being sold, has been a great hindrance to farmers, noting that since September 2007, the cost had increased from approximately $2,500, to $7,000 per bag.
He expressed confidence that even after allowances have been made for distributors’ and retailers’ mark-ups, this necessary input would still be affordable to farmers.
Dr. Tufton subsequently advised that the first order of 8,000 tonnes of fertiliser, valued at $300 million, had been made.
Dr. Tufton stressed that it was not the Government’s intention to drive the local manufacturer of fertiliser out of business. He said, too, that importation of fertiliser by the Government would be a temporary venture.