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Kenya eyes local production of fertiliser to curb costs

12 May 2016, 16:51

Kigali (Reuters) - Kenya plans to encourage local production and blending of fertilisers to help cut import costs and reduce subsidies needed to make fertilisers affordable for poor farmers, the agriculture minister said on Thursday.

Farming accounts for a quarter of Kenya's annual economic output, but the high cost of fertilisers means farmers rely on subsidies or avoid using them, which hurts output.

The government spent more than 16 billion shillings ($159 million) to subsidise fertiliser in the last three years, Kenyan Agriculture Minister Willy Bett said on the sidelines of the World Economic Forum on Africa in Kigali.

"The next step now is to manufacture fertiliser," he said, adding production of fertilisers could start in 2020 once the country starts production of hydrocarbons.

Kenya is seeking to develop oil reserves found in recent years, and the minister also pointed to some gas finds. Ammonia for fertilisers can be produced from hydrocarbon feedstocks, such as natural gas and oil.  

Toyota Tsusho is already putting up a fertiliser blending plant in the western town of Eldoret, Bett added.

High input costs have turned some farmers away from export crops such as coffee. Bett said the government was encouraging farmers to create unions and cooperatives that could group together to buy fertilisers in bulk, reducing costs for individuals. "Subsidy is not a sustainable programme," he said.

Kenya has also been reviewing levies and taxes charged on other key crops, such as tea. One plan is to drop a levy on Kenyan tea sold at a weekly auction in Mombasa.

Bett said the government wanted to encourage cotton growing too, after local production collapsed in the 1980s. Access to the U.S. market via preferential trade terms, known as AGOA, made it a more attractive crop again, he said.

"The opportunity in the U.S. market has really stimulated it but we have not taken full advantage of it as a country," Bett said.

- Reuters

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