Bangladesh raises prices of urea fertiliser by Tk 6 a kg

Both dealers and farmers will have to pay Tk 6 more for the fertiliser in light of the volatility in the international market

Staff Correspondentbdnews24.com
Published : 1 August 2022, 11:04 AM
Updated : 1 August 2022, 11:04 AM

The government has raised the prices of urea fertiliser by Tk 6 to Tk 22 per kg for farmers to keep in step with surging global prices and reduce the burden of subsidies.

The price at the dealership level also climbed to Tk 20 from Tk 14 as part of the government's efforts to regulate the use of fertilisers.

The new prices came into effect on Monday, the agriculture ministry said in an emailed statement.

One of the biggest fallouts from the Ukraine-Russia conflict has been the surge in fertiliser prices, prompting farmers worldwide to scale back its use.

In June, the United Nations' food agency warned that the spiralling costs could deter growers from expanding production and worsen food security in poorer countries facing record import bills.

An index of input costs for farmers was running at a record high and had climbed more steeply than food prices in the past year, suggesting low prices in real terms for many farmers, the Food and Agriculture Organization said in a report.

Western sanctions on Russia, a major exporter of potash, ammonia, urea and other soil nutrients, have disrupted shipments of those key inputs around the globe. Fertiliser is key to keeping corn, soy, rice and wheat yields high.

Combined, Russia and its close ally Belarus, which has also been subjected to Western sanctions, accounted for more than 40 percent of global exports of potash last year, according to Dutch lender Rabobank. Additionally, Russia accounted for about 22 percent of global exports of ammonia, 14 percent of the world's urea exports and about 14 percent of monoammonium phosphate (MAP), Reuters reports.

Bangladesh has also been hit hard by the disruption of the supply chain brought about by Western sanctions on Russia. In a bid to keep fertiliser prices in check, government subsidies also quadrupled in the last fiscal year, according to Agriculture Minister Abdur Razzaque. But he had previously given assurances that the price of fertilisers would not be raised, considering its effects on farmers.

The government has taken various measures in the last few months to reduce expenditure and ease the pressure on the foreign exchange reserves in light of global inflation, the depreciation of the taka against the dollar and an increase in import demand.

In keeping with the recent trend, the price of urea, the most widely used fertiliser, has also increased. The move is aimed at keeping its use at a 'reasonable level' amid skyrocketing prices in the international market, the ministry said.

However, considering that 2.6 million tonnes of urea are used annually, the government will only be able to save Tk 15.6 million in subsidies as a result of this step.

According to the ministry, the current price of urea fertiliser in the international market is Tk 81 per kg. As a result, the government will still have to pay a subsidy of Tk 59 per kg even after the latest price hike.

However, in the meeting of the government's purchase committee on Jul 21, the proposal to buy bulk granule urea fertiliser from Saudi Arabia at Tk 55.79 per kg was approved. That means that although the price of the fertiliser increased at the beginning of the year, it was much lower than the current price.

Meanwhile, diammonium phosphate (DAP), the world's most widely-used phosphorus fertiliser which contains 18 percent nitrogen or urea fertiliser content, is being supplied at a reduced price -- down from Tk 90 to Tk 16 per kg -- in order to decrease reliance on urea.

As a result of this initiative, the use of DAP fertiliser has doubled in the last few years.

In 2019, 800,000 tonnes of DAP were used, compared to 1.6 million tonnes at present.

The uptick in the use of DAP fertiliser was supposed to reduce the demand for urea, but that has not been the case.

Presently, 2.65 million tonnes of urea are being used, up from 2.5 million tonnes in 2019.

As the fertiliser prices skyrocketed, so did government subsidies, which climbed from Tk 77.17 billion in FY21 to Tk 280 billion in FY22.

SUFFICIENT STOCK

Playing down concerns over food security, the agriculture ministry said there is sufficient stock of all fertilisers to meet the national demand.

During the Aman season (July-September), the demand for urea in the country is 619,000 tonnes and the government currently has 727,000 tonnes in stock.

Meanwhile, there are 309,000 tonnes of TSP fertiliser in reserve against the demand for 119,000 tonnes.

The government also has 634,000 tonnes of DAP fertiliser in store, the demand for which is 225,000 tonnes, while the demand for potassium chloride is 137,000 tonnes against 210,000 tonnes in reserve.

Toufique Imrose Khalidi
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