Fertiliser factories in gas crisis

Farmers sprinkling fertiliser in paddy field
Prothom Alo file photo

Although the country usually maintains a stock of fertilisers required in three months, there is currently only one and half months’ stock of fertiliser.

Amid this, the Jamuna Fertiliser Company, the highest fertiliser producing company, was shut down on Monday due to the gas crisis. A total of three fertiliser factories are closed now, including this.

The factory has been closed down in such a time when the stock is limited and the demand is high. The farmers are cultivating Aman rice now. The Boro seasons will start in January.

The cultivation of onions and other winter vegetables will start by the end of October. Therefore, the demand for fertiliser remains high at this time of the year.

However, there is no crisis of fertiliser at the farmer’s level as yet. The price of fertiliser is higher than that fixed by the government. Fertilisers were being sold at Tk 1 to Tk 3 higher per kg than the price fixed by the government in seven districts on Wednesday.

The farmers say already their production cost has gone up as the government raised the price. This additional cost will further increase the production cost. The price of fertilisers rises at the farmer’s level in case of a crisis.

For instance, there was a deficit in the supply of fertilisers at the farmer’s level last October. Later, the farmers staged demonstrations in protest of additional prices and lack of supply.

The government has termed fertilisers a sensitive product and has always ensured enough stock of it. However, the problem emerged one and half years ago and it has been prevailing since then.

There have been complications in importing fertilisers due to decline in the forex reserve. At the same time, fertiliser factories could not be operated on full scale due to interruption in gas supply caused by the crisis of US dollars.

The Bangladesh Chemical Industries Corporation (BCIC) ensures the supply of urea, the main fertiliser used by the farmers, in the country.

Speaking to Prothom Alo, BCIC chairman Md Saidur Rahman said, “A few of the factories have been shut down due to the gas crisis. Those will be reopened as soon as the crisis is over.”

“We have signed agreements with Saudi Arabia, Qatar and the United Arab Emirates (UAE). We are expecting fertilisers under these agreements very soon. So, there is no risk of any crisis in this sector,” he added.

The Bangladesh Agricultural Development Corporation (BADC) oversees the supply of all the other fertilisers, including muriate of potash (MOP), di-ammonium phosphate (DAP) and triple super phosphate.

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BADC chairman Abdullah Sazzad told Prothom Alo, “We are trying to import fertilisers as soon as possible. We will receive fertilisers from Russia, Tunisia and Morocco within this month. We hope that there will be no fertiliser crisis.”

The demand and the stock

According to the figures of the agriculture ministry, the country has a total of 1.9 million tonnes of fertiliser in stock at the moment. The demand against that is some 1.2 million tonnes. The country has a stock of 750,000 tonnes of urea, the most used fertiliser in the country. The demand for urea in September is more than 500,000 tonnes.

According to the government data, the country will need 1.6 million tonnes of urea from next October to March. The main concern is that the three urea manufacturing companies have been shut down.

There are six fertiliser factories under the BCIC. Four of them produce urea. These four factories produced a total of 1 million tonnes of urea in the 2021-22. The three fertiliser factories, which have been closed down in recent times, used to produce urea. The Jamuna Fertiliser Company Limited was shut down last Monday due to crisis of gas supply.

The Chittagong Fertiliser Factory Limited and Ashuganj Fertiliser and Chemical Company Limited (AFCCL) were closed down temporarily for maintenance work. Both the factories could not be reopened and are not in production due to lack of gas supply.

Speaking to Prothom Alo, BCIC chairman Saidur Rahman, said, “We will be able to restart operations once we get the gas. If we can run all factories on full scale, then there will be no need for importing fertilisers.”

The BCIC is saying, the Ghorashal Fertiliser Public Limited in Palash upazila of Narsingdhi, which is awaiting for reopening, is being provided with gas on pilot basis now.

It is scheduled to be reopened by the end of November. Now only one factory under the BCIC produces urea.

Lack of foreign currency for imports

The agriculture ministry estimated the demand for fertilisers in the financial year 2023-24 at slightly more than 6.8 million tonnes. The government has a plan to import about 4 million tonnes, while the remaining amount will be produced in local factories.

All the imports, including fertilisers and gas, require dollars for payment. Bangladesh registered a steep decline in its forex reserve while settling the import bills. The reserve was at USD 48 billion in August 2021, but it now stands at USD 29.21 billion. The figure will go down further to USD 23 billion if the reserve is calculated as per the IMF prescribed method.

The government will have to pay import liabilities to the Asian Clearing Unit (ACU) soon and it is expected that the reserve will decline further.

The price of fertiliser in the global market dipped to a significant level, but it regained the rising trend recently. Each tonne of urea, which was USD 623 during the July-September period last year, fell to USD 288 in June and then rose to USD 386 in August this year.

The price of greenback has been on a steady uptick in the country. The exchange rate, which was at Tk 86 last year, now stands at Tk 109. The higher value of the dollar is also driving up the import costs.

The government is also facing a cash crisis to give subsidy for fertiliser. At the beginning of last month, the government owed Tk 60 billion in subsidies to the importers. It discouraged many from importing fertilisers.

Mustafizur Rahman, distinguished fellow of the Center for Policy Dialogue (CPD), said despite the forex crisis, it needs to import fertilisers to ensure food security. It should get priority as a lack of fertilisers would disrupt agricultural production.

High price

The government raised the prices of urea, DAP, TSP, and MOP fertilisers by Tk 5 per kg in April last year. At the farmer level, the price of urea was set at Tk 27 per kg instead of Tk 22, DAP at Tk 21 instead of Tk 16, TSP at Tk 27 instead of Tk 22, and MOP at Tk 20 instead of Tk 15.

While visiting seven districts recently, the retail prices of fertilisers were found slightly higher in some areas. Muhammad Hossain, a trader of Niamatpur upazila in Naogaon, was charging Tk 1 to 3 in extra for each kg of fertilisers.

A similar scenario was observed in Kurigram and Satkhira. Solaiman Hossain, owner of Krishi Bhandar in Satkhira town, said he charges Tk 0.50 to 1 more for each kg of fertilisers.

However, there were no such instances in Sherpur

Some farmers complained about being charged higher prices. Rafiqul Islam, a farmer of Rajabari village in Muktagachha upazila of Mymensingh, claimed that he purchased urea, DAP, and MOP fertilisers for Tk 30 per kg from a local market.

There is a longstanding complaint over charging the farmers extra for fertisers. The authorities conducted raids in various districts and fined the unscrupulous traders. But the ill-practice still prevails.

Need to ensure fertiliser supply

Individuals concerned have pointed out that an insufficient supply leads to stockpiling fertilisers, or price hike. It requires strict monitoring to prevent such practices.

Mustafa K Mujeri, former director general of Bangladesh Institute of Development Studies (BIDS), said the authorities must ensure the availability and supply of fertilisers to farmers at any cost. Otherwise, it will impact the food production.

There are indications in the meantime that even paying the high cost, food cannot be bought from the world market, Mujeri added.