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The Tunisian Fertilizer Distribution System - Structural and Policy Considerations

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The Tunisian Fertilizer Distribution System - Structural and Policy Considerations October 1975 Bulletin Number 2 ECONOMIC DEVELOPMENT CENTER __ The Tunisian Fertilizer Distribution System - Structural and Policy Considerations Die L. uood and Jerome W. Hammond ECONOMIC DEVELOPMENT CENTER Department of Economics, Minneapolis Department of Agricultural and Applied Economics, St. Paul UNIVERSITY OF MINNESOTA THE TUNISIAN FERTILIZER DISTRIBUTION SYSTEM - STRUCTURAL AND POLICY CONSIDERATIONS Dale L. Good and Jerome W. Hammond Bulletin No. 2 October 1975 Economic Development Center Department of Economics, Minneapolis Department of Agricultural and Applied Economics, St. Paul University of Minnesota Table of Contents Page Glossary .................................................. iii List of Tables ........................................... iv List of Figures .............. ..................... ...... vi I. Introduction ........................ 1 Objectives ............. ....................... 2 Data Sources ..... .............................. 3 Previous Studies .......................... .... 3 II. Fertilizer Demand and Use ...................... ......... 5 Use Trends .......... .......................... 5 Regional Use ..................................... 5 Use by Type of Fertilizer ........................... 8 Nitrogen....................................... 8 Phosphate...................................... 9 Potassium........ ..................... 9 Mixed Fertilizers ................................ 9 Estimation and Projection of Optimum Use and Demand For Fertilizer ....................................... 10 Fertilizer Goals .............. ................... 10 The Ministry of Agriculture's Estimates and Projections ....................................... 11 Crop Sector Projections ....................... 13 Recommended Application Rates .................... 13 Factors That Influence Fertilizer Demand and Use .... 17 Price Policies ................................... 17 Subsidization .................................... 20 Taxation........................................ 21 Rainfall Variation ........... ............... 22 Availability of Fertilizer ....................... 23 Credit ............................................ 29 Farmer Knowledge ................................ 31 III. Production and Distribution Systems ....................... 33 Market Channels for Fertilizer .................... 33 Fertilizer Manufacturers ........................... 37 NPK Fertilizer, S.A.T. .................... 37 The Industrial Society of Phosphoric Acid and Fertilizer (SIAPE) ............................... 40 The Tunisian Society of Chemical Fertilizer (STEC). 40 Society of Chemical Products and Fertilizers of Megrine (SEPCM) .................................. 41 Industrial Tunisian Society of Chemical Products and Fertilizers (STIPCE) ........................ 42 Imports and Exports Activities ....................... 42 Imports ........................................... 42 Exports ........................................... 45 ii Page Prices, Taxes, and Subsidies on Importers and Manu- facturers ......................................... 47 Ammonium Nitrate .............................. 47 Normal Superphosphate (NSP) ....................... 47 Triple Superphosphate (TSP) ....................... 48 Wholesaling and Retailing .......................... 48 The Wholesale Market ........ .............. 49 Operating Practices of Wholesalers ................ 50 The Retail Market ............................. 51 Government Offices and Agencies ...................... 51 Cooperatives . ................................... 55 Other Cooperatives ... ........... ......... 56 Independents ................. ........ .... .......... 57 Prices and Margins in the Retail Market for Fertilizer 58 Prices and Price Variation ........................ 58 Retail Margins ................ .................. 62 Shortages of Fertilizer at Retail ................. 62 Transport Cost, Methods, and Problems ................ 64 The Transportation System ......................... 64 Transport Rates ................................... 66 Transport Costs and Their Impact on Fertilizer Movement s ........ *........................... 70 The Transport Bottleneck .......................... 70 IV. An Analysis of Impacts of Price Controls, Taxes, and Subsidies........................ ...... ......... ..... 72 Impacts on Fertilizer Use by Individual Farmers ...... 72 Impacts on Market Supply of Farm Products .......... 77 Impacts on Manufacturers and Importers ............... 78 V. Summary and Recommendations ............................... 82 Fertilizer Demand ................. ....... 82 Fertilizer Distribution ............. ...... 83 Recommendations ........... ..................... 85 VI. Bibliography ........... ................... 87 iii Glossary of Abbreviations CCGC Central Cooperative for Cereal Crops CIMMYT Centro Internacional de Majoramiento de Maiz y Trigo COCEBLE Central Cooperative of Wheat EEC European Economic Community FAO Food and Agricultural Organization, United Nations GIAF Interprofessional Group of Citrus and Fruits GOT Government of Tunisia NSP Normal Superphosphate, 16% P205 OMVVM Office of the Development of the Medjerda Valley ONH Office of Oils OV Office of Wine SEPCM Society of Chemical Products and Fertilizers of Megrine SIAPE Industrial Society of Phosphoric Acid and Fertilizer SIDA Swedish International Development Agency SNCFT National Tunisian Railroad Company SRT Regional Transport Society STEC Tunisian Society of Chemical Fertilizer STIPCE Industrial Tunisian Society of Chemical Products and Fertilizers TD Tunisian Dinars TSP Triple Superphosphate, 45% P205 TVA Tennessee Valley Authority UCCV Central Cooperative Union of Grape Growers iv List of Tables Table Number Page 1 Actual and Projected Fertilizer Use, 1971-72, 1972-73, 1973-74.... 12 2 A Comparison of Actual, Estimated Optimal, and Projected Fertilizer Use in Tunisia, 1969-1976.............................. 13 3 Fertilizer Use Estimates by Crop Group in Tunisia, Actual Use 1971-72, Projected Use 1974-75.................................... 14 4 Fertilizer Use Estimates of Several Government Agencies, 1973-74.. 15 5 Actual and Recommended Rates of Fertilizer Application in the Cereal Sector, 1972.. ...................... .......... ... 15 6 Fertilizer Consumption Based on a Field Survey of 22 Large Scale Farms in Northern Tunisia, 1972........................... 16 7 Impact of Applying Recommended Levels of Fertilizer Use on Wheat in Northern Tunis (Mateur area), 1970-71.................... 17 8 Fertilizer Prices in Tunisia - 1960, 1968-74...................... 18 9 Fertilizer Prices in Tunis, February 1974......................... 19 10 Taxation of the Agricultural Sector, 1970, 1974...........0....... 21 11 Base Farm Prices and Taxes to Farmers on Durum, Bread Wheat, and Barley in Tunisia, 1974......................................... 21 12 Rainfall at Several Centers, August-October, 1972, 1973........... 23 13 Purchases of Superphosphate Fertilizers by the Cereal Organizations, 1972 and 1973...................................... 28 14 Fertilizer Production in Tunisia, 1961-74......................... 38 15 Ownership, Fertilizer Production, and Import Storage Capacity of the Tunisian Fertilizer Industry, 1973......................... 39 16 Tunisian Triple Superphosphate Production, Exports, and Inventories by Company, 1971-73................................. 41 17 Mixed Fertilizer Production in Tunisia, 1971-73.................. 42 18 Tunisian Fertilizer Imports, 1961-73.............................. 43 19 The Importance of the Phosphate Industry's Exports in Relation to the Tunisian Balance of Payments, 1968, 1970, and 1972......... 45 20 Principal Importers of Tunisian Triple Superphosphate, 1971, 1972, 1973 (January-August). ................ .................... 46 21 STEC's Fertilizer Sales by Kind, 1969-1973....................... 49 22 Market Share Estimates of Fertilizer Retail Sales, by Retailer Types and in Gouvernorats, 1973.................................. 53 23 Observed Independent and Cooperative Retail Prices of the Principal Fertilizers in the Gouvernorats of Bizerte and Nebeul, March 1974............................................. 60 24 A Comparison of Fertilizer Retail Prices Between Office of Cereals' Centers and Independent Retailers, March 1974............ 61 25 Average Retail Margins of Principal Fertilizers by Type of Retailer, March 1974... ............... ................. 63 26 Fertilizer Rail Transport in Tunisia, 1972 and 1973............. 67 27 Changes in Rail Transport Rates from 1973 to 1974 by Volume and Dis tance................... ...... ................. ........ 69 28 Changes in Truck Transport Rates from 1973 to 1974 by Volume and Distance.................... ................... 69 29 Bread Wheat Fertilizer Trials and the Profitability of Fertilizer Use, 1973 and 1974.................................... 73 vi List of Figures Figure Number Pa 1 Fertilizer Consumption, 1973........................... *. ****.. 6 2 Fertilizer Sales in Tunisia by Regions, 1973..................... 7 3 Monthly Sales of Normal Superphosphate by the Tunisian Society of Chemical Fertilizer, 1973.................................... 24 4 Ammonium Nitrate Imports by Month, 1973.......................... 26 5 Monthly Shipments of Fertilizer by Rail, 1972.................... 27 6 Monthly Purchases, Sales, and Stocks of Normal Superphosphate (Office of Cereals), 1973....................................... 30 7 The Distribution System for Ammonium
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