Tk 63b in arrears, traders reluctant to import fertiliser

The crisis of dollar, arrears to suppliers and reluctance of contractors to participate in tenders -- these are the three problems the agriculture ministry is facing in importing fertilisers at the start of the new fiscal year (2023-24). As a result, some uncertainty about the supply of fertilisers is being created.

According to sources from the Ministry of Agriculture and fertiliser importers, the amount owed by the suppliers to the ministry is around Tk 63 billion. Besides, importing fertilisers requires a large amount of foreign exchange. There is also a crisis in the banking sector.

The crisis is not confined to importing fertiliser alone; sufficient dollar is not available to import fuel too. The private sector is also facing a crisis while importing products. On the other hand, due to insufficient revenue collection, the Ministry of Finance is not able to pay subsidy money on time in various sectors including electricity, fertiliser.

Uninterrupted supply of fertiliser is essential to maintain cultivation and crop production in the agricultural sector of the country. The government provides fertilisers at subsidised prices to keep production costs down for farmers. The demand of fertiliser will be highest during the ongoing Aman and Boro season starting next January.

Agriculture minister Abdur Razzaque told Prothom Alo, “There is a dollar-crisis, and there is no way to deny it. However, we are discussing at the highest level of the government to deal with the dollar crisis through Bangladesh Bank.”

Stating that the dues will be paid in phases, the agriculture minister said, “We have enough stock of fertiliser now. We will be able to solve these problems before the next Boro season.”

According to the calculations of the Ministry of Agriculture, the country has an annual demand of about 6 million tonnes of fertilisers. Most of the amount is imported; the rest is produced in the country’s factories. Production again depends on gas supply.

In the financial year 2021-22, about 5.9 million tonnes of fertiliser was sold. Some 88 per cent of it or 5.2 million tonnes has been imported. The demand for fertilisers in the financial year 2023-24 is estimated to be a little more than 6.8 million tonnes. The government plans to import about 4 million tonnes of it.

According to the rule, the importers import directly from the global market by participating in the government tender. But that must be sold at a price fixed by the government. The government pays the extra expenditure as a subsidy.

According to sources from the Ministry of Agriculture, at the beginning of the current financial year, an initiative of importing 600,000 tonnes of fertilisers has been taken. But the country’s major importers are not responding to it. Two tenders were called last June. No one attended in one of them. Only one institution participated in the second one. The name of the company is Saifullah Gulf Limited. There, the price of DAP fertiliser per tonne was fixed to US $515 and TSP to $485.

In another tender, Saifullah Gulf had bid $600 per tonne to import 30,000 tonnes of MOP fertiliser. The tender evaluation committee of the Ministry of Agriculture canceled the proposal as it was considered higher than the market price.

Fertiliser prices have fallen drastically in the global market. According to the World Bank’s commodity price list, the average price of urea fertiliser for supply to Europe during April-June last year was $774 per tonne, which fell to $288 last June. At the same time, the price of DAP fertiliser fell from $860 to $455 per tonne. And the price of TSP fertiliser has decreased from $805 per tonne to $390.

Although the price of fertiliser has fallen in the global market, the price of dollar has increased in the country. In May last year one dollar was equal to 86 takas but now it has risen to 109.5 taka.

The Ministry of Agriculture increased the price of fertiliser by Tk 5 per kg last April due to the increase in the price of the dollar in the world market. Now at the farmer level, the price of urea per kg is Tk 27, DAP Tk 21, TSP Tk 27 and MOP Tk 20. Last year, the government had to spend Tk 150 billion as a subsidy on fertiliser. Fertiliser prices in the global market this year were expected to reduce expenditure due to subsidies. But when import cannot be done at competitive price there lies a risk of high costs.

The top officials of the country’s three major fertiliser importing companies told Prothom Alo that it is possible to supply fertiliser at a lower price if the government quickly opens credit cards and provides dollars through Bangladesh Bank. But due to non-payment, importers are not interested in importing. On the other hand, the government is importing through one organisation. It does not ensure competition. The price is going up.

Mohammad Jahangir Alam, professor of Agricultural Business and Marketing Department at Bangladesh Agricultural University, told Prothom Alo that import and availability of fertilisers should be the highest priority of the government. However, it is not right to import fertiliser at a higher price than that of the international market. He said that by ensuring easy availability of dollars and payment of outstanding dues to importers, initiatives should be taken to import fertilisers at competitive prices as soon as possible.

Due to two reasons, the demand for fertiliser may be high in Aman this time. Firstly, less rainfall in July creates a risk of reducing soil fertility. As a result, more fertiliser may be needed; secondly, as the price of rice is good in the market, farmers can plant Aman on additional lands, which will increase the demand for fertilisers.

Khondaker Golam Moazzem, research director of the non-government research organisation Center for Policy Dialogue (CPD), told Prothom Alo that the country’s food security should be given the utmost importance in the current global situation. In that case, the import of fertilisers for crop cultivation should be ensured at specific times and in specific quantities.

He said that the government is increasing allocation for buying vehicles for government officials. Salaries are also increased. But not paying the dues of fertiliser. In the last Ramadan, the necessary amount of dollar was not available to import the goods.

Golam Moazzem further said it is more important to import fertilisers for farmers quickly than appeasing the government officials on political consideration.

* The report was originally published in the print edition of Prothom Alo and has been rewritten in English by Syed Faiz Ahmed