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Farmers are facing a sharp rise in the cost of imported fertilisers, with global prices for Urea and Diammonium Phosphate (DAP) increasing by more than 40pc year-on-year.
International Urea prices are expected to reach to 488.3 dollars a metric ton in the first quarter of the 2025/26 fiscal year, up from 340.8 dollars in the same period a year earlier. The 43.3pc annual jump marks the highest point for Urea in several years. The rise has not been abrupt but consistent. The commodity’s price moved from 359.7 dollars in the second quarter of last year to 403.8 dollars in the third quarter and then surged 22.1pc quarter-on-quarter from 399.8 dollars in the previous quarter of last year to the current level.
DAP prices followed a similar trajectory, climbing to 770.6 a metric ton during the reporting period. This represents a 40.1pc year-on-year increase from a year ago, with a quarterly jump of 14.5pc from 673.2 dollars in the prior quarter. Throughout the year, DAP prices moved steadily higher, starting at 572.1 dollars in the second quarter and rising to 600.5 dollars in the third, before accelerating sharply in the most recent periods.
The Ethiopian Economic Association, which released its latest quarterly macroeconomic updates last week, called spending on fertilisers, comprising 10pc of total import bills, one of the most critical pressures on the country's balance of payments and agricultural sector. According to the report, dependence on foreign-sourced fertiliser has exposed farmers and the broader economy to price shocks, currency risks, and supply bottlenecks.
Fertilisers stood out as one of the fastest-rising import commodities during the review period. Urea and DAP have contributed to swelling import costs, averaging 1.8 billion dollars a year, outpacing other import categories but petroleum products. Rising prices in global markets are transmitted directly into the economy, straining foreign exchange reserves and raising production costs for the predominantly agrarian workforce.
Nasir Yenus (PhD), a senior researcher, is the macroeconomic research team leader for the Association and one of the report's principal authors. He was candid about the risks facing Ethiopia from its dependence on imported fertilisers.
“The country needs fertiliser to support agricultural production, but the foreign exchange required to import it is being depleted as the Birr continues to depreciate,” Nasir told Fortune.
Nasir saw how a weaker Birr increased the cost of imports, putting additional strain on foreign exchange reserves at a time when the country can ill afford it. According to Nasir, the double-edged sword is present in the interplay between foreign currency inflows and outflows. While gold and coffee exports, representing 64pc of exports, generate foreign exchange earnings, the rising cost of fertiliser erodes the net benefit from these earnings.
“The situation is particularly critical this quarter, when export receipts typically support foreign exchange,” he said.
Nasir urged policymakers to reduce reliance on imported fertiliser and pursue domestic production, a move he said could be key to limiting foreign exchange losses.
The impact of rising fertiliser costs and uncertain delivery schedules is already being felt across the farming communities. Last year, DAP sold for around 8,000 Br a quintal and Urea for 5,500 Br, but prices for this year had not yet been announced to farmers under Ghion Farmers Union in Dejen, Amhara Regional State.
The Union represents more than 26,000 members, received 21,184Qtls of DAP and 4,400Qtls of Urea this month, but the supply remains insufficient, Wube Gashu, the Union's president, disclosed.
“We're promised more, but that is not the only issue," Wube told Fortune. "Our members aren't gathered in one location, and distributing fertiliser at the Woreda level is difficult due to the current security concerns.”
Kassaye Cheru, who leads the Lomi Adama Farmers Union in Modjo, Oromia Regional State, and represents 65,000 farmers overseeing roughly 200,000Qtls of wheat production annually, echoed these concerns. Kassaye described fertiliser delivery delays of up to six months last year, which severely complicated planting and production. This year, the products arrived on time, with 58,000Qtls of Urea and DAP delivered this month.
"We're expecting an additional 200,000Qtls," said Kassaye. "However, the price for this year has not yet been revealed, so we have not sold these products.”
Uncertainty around prices is a growing source of anxiety for farmers, leading some to experiment with natural fertilisers to cut costs.
For farmers such as Badme Fente, who produces teff in Dejen and supports a family of five, including three children, the cost of fertiliser has become a critical concern. He needs about 15Qtls of fertiliser annually, but found prices have climbed from 6,500 Br a quintal in previous years to between 8,000 and 10,000 Br last year.
“If prices continue to rise, I may not be able to afford it," Badme told Fortune.
Similar difficulties are being experienced by Nigussie Alehegn, a wheat farmer in Dejen who produces 80 Qtls annually. Last year, DAP cost him around 8,000 Br a quintal, but shortages forced farmers like him to buy from informal traders at prices above 10,000 Br.
“This year, we haven't received any fertiliser because they say the price has not yet been set," Nigussie said. I'm concerned that the cost will increase further, making it even more expensive to afford.”
The stories of Wube, Kassaye, Badme, and Nigussie reveal broader trends. Farmers are contending with delayed deliveries and price uncertainty, disrupting agricultural planning and putting production at risk. Ethiopia’s heavy dependence on imported inorganic fertilisers leaves its food security exposed to global market shocks, transport disruptions, and currency depreciation.
Ethiopia is one of Africa’s top fertiliser importers, setting an ambitious target of importing 2.4 million metric tonnes in 2024/25 through a tightly controlled state procurement process. By early May 2025, nearly half of this volume, 1.2 million tonnes, had landed at ports in Djibouti. Federal procurement officials reported that over 11.2 million quintals had already been cleared and channelled to farming communities, with the lion’s share flowing to the breadbasket regional states of Oromia, Amhara, and Southern, as well as Sidama.
This followed a record-breaking year in 2024, when Ethiopia imported close to 1.97 million tonnes, cementing its position as the continent’s principal fertiliser buyer. The 2025 campaign aims higher, with authorities racing against time to secure inputs before the primary planting season, an urgent effort, given recent disruptions to global fertiliser markets.
The Ethiopian Agricultural Businesses Corporation (EABC), responsible for over 90pc of the imports, issued tenders for 425,000tns of DAP. Morocco, long the dominant supplier of phosphate-based fertilisers to Ethiopia, retains a central role. China has emerged as a supplier to be reckoned with, though recent shipments have faced logistical snags. Urea imports have also surged to unprecedented levels. Between January and July 2025 alone, Ethiopia took delivery of 616,000tns, nearly eclipsing the 707,000tns imported during all of 2024. Egypt supplied the bulk of Urea, but tightening gas supplies have forced the Corporation to diversify sources in 2025.
Distribution remains the province of a cooperative network, operating under federal government oversight. From the ports in Djibouti, fertilisers are trucked to inland warehouses and dispatched to unions, who ration supplies to smallholders.
According to Arega Shumete (PhD), an agricultural economics expert and team leader at the Association, farmlands and farmers are highly dependent on fertiliser, making demand inelastic. Global prices have been climbing since the start of the Russia-Ukraine war, with the price increases quickly passed through to domestic markets.
“As prices rise, farmers may reduce the amount of fertiliser they apply or stop using it altogether,” Arega said.
He noted that farmers already use less than the recommended 200Kg of Urea and DAP per hectare, and further price hikes could push usage even lower, directly undermining productivity. Arega also traced the link between fertiliser costs and inflation, warning that the higher prices may eventually be passed on to consumers through increased food prices or result in lower agricultural output, which would tighten supply.
“When there is a shortage of agricultural products, prices will increase,” he said. "Both outcomes contribute to inflation and a higher cost of living."
For short-term relief, Arega urged timely procurement, sourcing fertiliser from nearby countries to reduce shipping costs, and channelling revenue from other sectors to support agriculture. He also pressed on the importance of subsidies and fair distribution practices for protecting smallholder farmers. In the long term, the federal government should expand domestic fertiliser production to limit its exposure to international markets and improve food security.
The federal government has included plans for a domestic mineral fertiliser manufacturing plant in its 10-year roadmap through to 2035. The project is a joint venture between Nigeria’s Dangote Group, which holds a 60pc stake, and the Ethiopian Investment Holdings (EIH). The plant, to be built in Gode, Somali Regional State, is expected to cost 2.5 billion dollars and produce three million tons of Urea annually.
Construction began in August 2025, with completion targeted for late 2028 or early 2029. The plant will use natural gas from the Calub and Hilala fields, supplied through a dedicated pipeline.
PUBLISHED ON
Dec 20,2025 [ VOL
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