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Middle East conflicts threaten Ruto’s fertiliser subsidy plan
There are fears that ongoing conflicts in the Middle East could affect the cost of producing fertiliser, which would hurt Kenya’s food security prospects next year.
An escalation of ongoing conflicts in the Middle East could raise the global costs of producing fertiliser in 2025, new World Bank projections showed, casting a shadow on Kenya’s plans to distribute over 93,000 tonnes of the farm input under a subsidy programme.
In its latest commodity markets outlook, the World Bank said the conflict could drive up the costs of oil as well as those of natural gas, which are key ingredients in the manufacture of fertiliser, resulting to higher-than-expected prices of the crucial plant nutrients.
“Oil and natural gas – an essential input for fertiliser production – could be priced higher should there be a prolonged escalation of conflict in the Middle East. Natural gas prices could also be driven upward by greater-than-anticipated reductions in Russian natural gas supplies to Europe,” notes the multi-lateral lender in the report.
“Such developments, in turn, could lead to higher-than-expected fertiliser prices, and hence higher agricultural prices more broadly.”
A market report by Reuters said oil prices held steady near one-month lows on Wednesday, after sliding in the previous two sessions, as markets weighed a potential ceasefire between Israel and Hezbollah and rising Opec+ crude supplies against a possible drop in US fuel stocks and demand concerns.
In Kenya, an elevation of global fertiliser prices could deal a blow to President William Ruto’s pet subsidy programme which has been touted as a cure for perennial foods shortage in the country and the attendant price climbs.
Since introduction of the programme, farmers have been buying subsidised fertiliser from the National Cereals and Produce Board (NCPB) at between Sh1,775 and Sh3,500 per 50 kilogramme bag, a departure from the market price, which is pegged at more than Sh6,500 for the same quantity.
During the current financial year ending June 2025, the government has set aside Sh10 billion to cater for the fertiliser subsidy programme, which marks a reduction from the Sh16.2 billion spent on the initiative during the fiscal year that ended June this year.
The programme has, however, been marred by controversy with farmers being given substandard fertiliser during this year’s long-rain planting season.
Tensions have risen in the Middle East in the recent weeks amid conflict between Israel and Hezbollah in Lebanon and Hamas in Gaza.
Israel went on the offensive against Hezbollah after almost a year of cross-border hostilities sparked by the war in Gaza, saying it wanted to ensure the safe return of residents of border areas displaced by Hezbollah rocket, missile and drone attacks.
Israel and Palestinian group Hamas has also been embroiled in a brawl since October last year, in a period that also saw Yemeni Houthis carry out attacks on the Red Sea shipping lane in solidarity with the Palestinians.
