A fertilizer crisis in the making!

In the face of rising price in the international market, the government provided an estimated subsidy of Tk 300 billion on fertilizer imports in the current fiscal to ensure smooth supply and affordable price in the country. The subsidy is over three times higher than the allocation made in the annual budget.

Even then the farmers had to count Tk 10 more than the fixed price to have each kg of fertilizer during the ongoing Boro season.

Now, Bangladesh is struggling to meet domestic demands for muriate of potash (MOP) fertilizer as Russia and Belarus, two key MOP producer of the world, have been banned from exporting the chemical substance.

The government used to import 60 per cent of total demand for muriate of potash (MOP) fertilizer from the two countries. Having no option in hand, it now turned to Canada to import the chemical substance for the time being.

But a fear created that the country might face an acute crisis of fertilizer due to price rise in the international market and uncertainty on imports. Besides, the retail price could be hiked to deal with the excessive pressure of subsidy.

The US Department of Agriculture (USDA) revealed the scenario in its recent report, “Russia-Ukraine war impact on fertilizer supply and use in Bangladesh”.

The report said a 20 per cent reduction in MOP supply would result in a 15-20 per cent yield reduction for rice and other grains, which eventually affect domestic production and food security.

The US agency also indicated that Bangladesh may suffer a severe MOP shortage in the upcoming boro/rabi season (November 2022 – March 2023).

However, the senior officials of the agriculture ministry said the country needs no more fertilizer this boro season. But the demand for MOP, urea and other fertilizers would increase in the upcoming potato season. The government initiated discussion with fertilizer exporters, including Canada and Middle Eastern countries, to ensure smooth supply in the country.

Agriculture minister Abdur Razzaque told Prothom Alo, “We have taken an initiative to import 800,000 tonnes of MOP fertilizer from Canada. A memorandum of understanding (MoU) has been signed with Canada in this regard,”

He assured that there is no reason to be worried about fertilizer supply.

However, the amount of subsidy in fertilizer increased considerably. But the government would continue the subsidy to keep crop production unhampered, added minister Razzaque.

Bangladesh consumes approximately 6.9 million tonnes of chemical fertilizers annually. The four major imported chemical fertilizers are urea, triple super phosphate, diammonium phosphate, and MOP. The demand for the imported fertilizers has been reduced to 5.5 million tons in FY23.

Some 80 per cent of the total domestic demand is met through imports. Russia and Belarus were the dominant suppliers of MOP in Bangladesh.

The government controls and regulates the supply and distribution of chemical fertilizers and highly subsidizes urea, TSP, MOP, and DAPS, to increase affordability of farmers.

It initially allocated a subsidy of around Tk 80 billion in this regard in the current 2021-22 fiscal.

But it had to raise the subsidy to Tk 120 billion due to price rise in the international market in the first six months. In a year-end calculation, the agriculture ministry found the total subsidy provided in the year at Tk 300 billion.

The government does not subsidise gypsum, zinc sulphate, ammonium sulphate and magnesium sulphate. The importers buy it from the international market and sell to farmers directly. As a result, farmers paying extra for these chemical products.

Former agriculture secretary AMM Shawkat Ali told Prothom Alo, “Natural disasters are disrupting our crop production this year. Now, it is necessary to make sure that no more hazards appear in the scene due to the prevailing fertilizer situation.”

He also said that the government should reduce the subsidy in other sectors and increase the allocation in fertilizer, if necessary, to keep the price under control.

The former secretary also warned that importing food from the world market might be more difficult in the coming days. So, the price and supply of fertilizers should be kept normal to maintain the production.