Cost build up webinar FERTILIZER COST BUILD UP

Cost build up webinar FERTILIZER COST BUILD -UP Main Findings of the Fertilizer Cost build up studies and process maps Kido KOUASSI, Sub Regional Coordinator| En. GRAIS | IFDC

Reducing Fertilizer Price At Farm Gate What Does It Take?

The Fertilizer Journey 280 $/MT Manufacturer/Trader FOB(Cost + Margin): 250 Freight: 30 500 $/MT Importer/Blender Insurance: Port Charges: Demurrage: Bagging: Transit: Custom Clearance: Unbagging: Blending/Bagging: Margin: 4 20 16 61 6 3 25 65 550 $/MT 600 $/MT 640 $/MT Distributor Transport: 20 Margin: 30 Wholesaler Transport: 10 Margin: 40 Retailer Margin: 40 Or 16 000 CFA/50 Kg Bag Farmer Transport

Detailed of costs build up At retail in Burkina Faso through port of Abidjan

Summarized Cost build up Simple Fertilizer Vs NPK Abidjan, Burkina Faso, and Mali through port of Abidjan

Optimizing the Cost : CFR • Influence On CFR Freight per Carrier Size • International Markets • Oil, Fertilizer Commodity • Seasonality • Supply and Demand • Larger Volumes • Lower Shipping Cost • Bargaining with Supplier These are values from Baltic Sea (Russia, Norway) in USD/ton Dakar Abidjan Tema Lomé Bulk carrier Handymax Handysize (30, 000 to 60, 000 tons/vessel) Min 20 22 23 23 Max 24 26 27 27 (15, 000 to 30, 000 tons/vessel) Min 26 28 29 29 Max 30 32 33 33 Mini bulk carrier Container (24 to 25 (1, 000 to 10, 000 tons/20”contain er ) tons/vessel) Min 37 39 40 40 Max 41 43 44 44 Min 49 51 52 52 Max 54 56 57 57

Optimizing the Cost : Importing Charges • Influenced by • Stevedoring • Port Charges • custom clearance: Already Low • Bagging twice: Not Optimal Handling Fees Based on Location (in USD/ton) 4. 0 3. 0 2. 0 3. 5 2. 6 1. 7 1. 0 1. 7 1. 3 0. 9 0. 70. 80. 9 Minimum Average Maximum 0. 0 Harbor City Major Hinterland Average City Hinterland City

Optimizing the Cost : Demurrage • Daily Fee paid after Free Time • Terminal Authorities • Shipping company • Average 1 USD per Ton per Day • Causes • • Weather Congestion Administrative delay Slow Handling

Optimizing the Cost : Avoiding Demurrage Occurrence of wait times more than 5 days and more than 10 days before unloading in weeks in a year 60 • Proactivity 50 • Simplify Logistic Axis Title 40 Number of weeks/52 weeks with waiting time > 5 days 30 • Negotiation Policy 20 Number of weeks/52 weeks with waiting time > 10 days 10 0 Importer Level Dakar Abidjan Tema Lome • Wavers for Fertilizers • Priority Berthing

Optimizing the Cost : Margin 2 months 6 months 10 months (tendering) Warehouse Rental Cost (USD/ton/month) 15. 0 Minimum 10. 0 Average 5. 0 Maximum . . . ge er a Av aj or Hi é M Lo m dj an 0. 0 Ab i • Competion • Market Growth • Enabling Environment National Company (Ghana) 20% a • Optimizing National Company (UEMOA) 12% Te m Financial Cost Human Resources Rents/Storage Overheads Profit Multinational Company 5% ka r • • • 55 50 45 40 35 30 25 20 15 10 5 0 Da • Margin Coverage Bank interest in ECOWAS

Taking The Knowledge from Port to Farms: The Fertilizer Cost Simulator • Target: • Private Sector • Governments Fertilizer Acquisition Programs • Objective: • Easy to use Tool to Evaluate Cost • Compare Logistic Options