Last harvest season was abundant for Shiferaw Mamo, 47. A father of six, he and his family depend on a 2.5hct of land in Butajira, Gurage Zone, 140Km south of Addis Abeba.

He rented an extra hectare from his neighbours for 20,000 Br to expand his wheat and maize farming last year. Millions of farmers like Shiferaw put Ethiopia on the global map of a dozen countries that produce more than 10 million tonnes of wheat and maize . A savvy farmer, Shiferaw also used two quintals of NPS fertiliser and urea on the plots he farms. Last November, he reaped what he sowed. He harvested 33qtl of wheat and 42qtl of maize from each hectare, above the national average of around 30qtl.

He was delighted with the outcome, although things were about to turn for the worse.

In December, he cut short his plans to rent out the extra hectare, hearing that the rental fee had doubled to 40,000 Br. The news came as a blow to Shiferaw, who was determined to boost productivity on his 2.5hct land.

There was another unpleasant surprise awaiting him. Two weeks ago, he travelled to the fertiliser distribution centre 20Km away from his farm, where he had bought the NPS and urea last year. What he found there left him stunned. Prices for a quintal of fertiliser had nearly tripled since he bought it last.

"I wasn't prepared for this,” Shiferaw told Fortune.

He was not alone. The outlandish rise in fertiliser prices was also a shock to Ayachew Desalegn, 45. A farmer in North Gonder, he resides almost 800Km farther north of Shiferaw.

Ayachew, a father of three, farms maize and teff on a 1.5hct of land in Dera Wereda. NPS is his fertiliser of choice - he bought two quintals last Mehir season, spending 1,600 Br a quintal. It was worth it, as Ayachew harvested 38qtl from his plot, eight quintals more than the yield from the previous year but without fertilisers.

This time around, things do not add up.

“I can only buy half the fertiliser I bought last year,” he told Fortune.

Shiferaw and Ayachew are among the eight million smallholder farmers who use urea, NPS, and mixed fertiliser to boost productivity on 10.1 million hectares. Fertiliser imports have risen, reaching 1.8 million tonnes last year, from 440,000tn in 2008.

Yet, fertiliser use remains low. Only 40pc of smallholder farmers use the input.

The Ethiopian Agricultural Businesses Corporation, established seven years ago through the merger of five public enterprises, is the sole importer of fertilisers to the Ethiopian market. Officials say granting the Corporation a monopoly over the input is an economically sound decision, allowing it more bargaining power in negotiations as it imports vast quantities at a time. The logic of economy of scale applies here.

Under Kefle Woldemariam, the Corporation is tasked with importing fertilisers after forecasting demand for the year. Projected demand is reviewed, and what is in stock is considered before a joint team comprising representatives from the ministries of Agriculture and Finance and the National Bank of Ethiopia (NBE) nods approving the procurement from the international market.

The Corporation planned to spend 1.6 billion dollars buying 780,000tn of NPS and half a million tonnes of urea. Close to 430,000tn of NPS and a quarter of a million tonnes of urea had arrived at ports in Djibouti in January this year. Many of the 14,000 cooperative unions in the regional states are responsible for transporting the consignment to central warehouses dotted across the country. Primary cooperatives receive the fertiliser from unions; farmers like Shiferaw and Ayachew buy on cash and credit.

Close to 35pc of the 18 million small-scale farmers use input voucher sales (IVS) to buy fertiliser, improved seeds, and agrochemicals. It is a system introduced by the Agricultural Transformation Institute (then an Agency) in 2014. It assigns microfinance institutions to provide credit to farmers through vouchers. The farmers are granted up to a year to pay back the debts.

Last year, 1.2 million tonnes of fertilisers were sold through the voucher system. Neither Shiferaw nor Ayachew made use of it, however.

The lending interest rate of 15pc dissuaded Shiferaw from registering. Escalating fertiliser prices in the international market mean he is unlikely to join his peers in the voucher system soon.

Last year, fertiliser imports cost the national coffer 688 million dollars, accounting for nearly five percent of the country's total import bill. Most of the fertiliser was shipped in from the Morocco-based OCP Group. Morocco is home to the world's largest phosphate reserves (a component crucial for most commercial fertilisers). Smaller amounts were imported from Egypt, the United Arab Emirates (UAE) and Saudi Arabia.

OCP Group also supplied the 780,000 tonnes of NPS Ethiopia bought this year, while FertiGlobal sold half a million tonnes of urea.

Incorporated in 2003, FertiGlobal is the agricultural unit of Larderello Group, an Italian conglomerate and a main player in the international chemical industry. It terminated the contract after supplying half of the urea, due to the rising prices in the global market, according to Solomon Gebre, deputy CEO of the Corporation.

Initially, the company agreed to supply urea at 710 dollars a tonne. Prices have since surpassed the 1,000 dollar mark, pushing the company to halt the deal.

"The government is searching for an alternative to buying the remaining amount," said Solomon.

The price of NPS has also climbed from 280 dollars a tonne to 650 dollars this year. This has led the foreign currency expenditure on fertiliser to increase by 24pc annually over the past decade.

Fertiliser prices in the international market have been soaring since 2020, partly due to an increase in the cost of natural gas. Fossil fuel accounts for up to 80pc of variable costs in nitrogen fertiliser manufacturing. Last November, urea prices spiked to 900 dollars a tonne, up 30pc from the preceding month, according to IndexBox, a market research platform.

Global production of nitrogen fertilisers stands near 118 million tonnes, with four countries - China, the US, India, and Russia - accounting for 54pc.

The war in Ukraine has exacerbated the already climbing prices for the input. Urea prices jumped by more than a third the day after Russian forces crossed Ukraine's borders a month ago. Commodities like petroleum, wheat, edible oil, and nickel have also seen a sudden spike in prices. It is an added burden on the federal government, which heavily subsidises fertiliser - to the tune of 4.3 billion Br last year.

Shipping costs have also increased dramatically. Last year, it cost 31.3 dollars to transport a tonne of fertiliser to Ethiopia. It jumped to 80 dollars this year.