The government has incurred heavy losses after it decided to reduce the prices of nitrogenous fertilizers this month by 25%, ignoring the fertilizers stored by the Bank of Agricultural Credit and Development. Mohamed el-Khishin, head of the Fertilizer Dealers Division of the Federation of Chambers of Commerce, estimated the losses incurred following the government's decision to reduce the price of a ton of fertilizers from LE 1500 to LE 1200 at LE 210 million, representing the price difference of 700,000 tons stored in the warehouses of the bank.
According to previous decisions, the public fertilizer plants deliver 7.2 million tons to the bank at a subsidized price of LE 750 per ton for the bank to sell to the farmers for LE 1500. The difference goes to a fund that buys 2 million tons per year at world prices. An official source at the bank said it would not shoulder the difference as it acts as a mediator between the plants and the farmers for a commission. He said the fund that is managed by the Ministry of Finance and several other ministries will bear it as usual. Meanwhile, a crisis erupted between Minister of Agriculture Amin Abaza and four fertilizer companies because of the decision that he took, which caused them to lose LE 60 million.
Ahmed Hagrass, Undersecretary of the Fertilizer Exports Council, said that the four companies had imported 50,000 tons of fertilizers at LE 2500 per ton and tried to re-export them when their prices went down in the domestic market, but the Minister of Agriculture asked them to sell them to the bank to meet the needs of the farmers. It was agreed to sell them for LE 2400 per ton, and the Minister said he would directly order the bank to buy after he gets approval form the Council of Ministers, which he did. Yet the bank did not implement the decision for nearly two months, during which the prices fell significantly. The bank then asked the companies to sell for LE 1500 per ton on the grounds that this was the prevailing price at the time.
