Subsidy for fertiliser to decline
Subsidies on fertiliser products will probably decline to around Tk 7,000 crore in the outgoing fiscal year as falling prices for the key farming ingredient and cheaper transport costs will eventually enable the government to improve spending on other purposes, said numerous private importers and officials of the agriculture ministry.
The amount is merely 9 per cent significantly less than the prior fiscal year's subsidy of Tk 7,700 crore.
"We are reaping the benefits associated with the reduced oil prices due to the pandemic," said a senior official of the ministry of agriculture (MoA).
Besides, the purchase price for fertilisers in the upcoming fiscal year will decline by about $40 per tonne, he added.
The Bangladesh Fertiliser Association (BFA), formed by private importers and fertiliser dealers, said that its members already are purchasing the product at lower prices than that of the previous year.
The BFA could import Diammonium phosphate (DAP) for the government's use within the next fiscal year at $309-$315 per tonne, down from $358-$364 a year earlier, according to BFA Executive Secretary Riaz Uddin Ahmed.
Alternatively, the purchase price per tonne for Muriate of Potash (MOP) rose by $80 this season, he said.
To produce a selection of crops, Bangladesh uses roughly 50 lakh tonnes of chemical fertilisers annually, three-fourths which is imported from countries such as for example Morocco, Tunisia, China, Saudi Arabia, Belarus, Russia, the UAE and Canada.
The remaining demand is met by local manufacturers.
It costs about Tk 15,000 crore each year to import such a large amount of fertiliser and the government bears a huge part of this expense to supply the ingredient to farmers at fixed prices.
Farmers purchase urea at Tk 16 per kilogram and MoP at Tk 15 per kilogram. Meanwhile, DAP and Triple Super Phosphate (TSP) can be purchased at Tk 16 and Tk 22 respectively.
If the import or production cost exceeds the fixed rates, the federal government pays the difference through the taxpayers' money.
At present, the federal government offers a Tk 10 to Tk 20 subsidy for every kilogram of fertiliser in order that farmers can purchase the material at reduced prices and keep their production costs low, said the official of the agriculture ministry.
The federal government had allocated Tk 9,000 crore as subsidy for Bangladesh's agriculture sector in the outgoing fiscal year. The same amount is expected to be earmarked for fiscal 2020-21 to help the united states meet its 51 lakh-tonne demand for fertilisers.
The projection for next year's fertiliser requirement is 16 % greater than the provisional estimate, which was 44 lakh tonnes through the outgoing fiscal year, the state said.
However, since the utilization of fertilisers is likely to increase, subsidies on the merchandise might not decrease despite the fall in prices in the global market, he added.
The World Bank (WB) Commodities Prices data in June showed that the average price for DAP, TSP and urea slumped in the first quarter of 2020.
Except for TSP, the prices for all your products dropped in-may, in line with the WB data.
For instance, the global selling price for DAP decreased from $358 tonne per tonne in March to $263 per tonne in-may.
Earlier this month, the Agricultural Market Information System (AMIS) said that although fertiliser production has resumed in lots of parts of the world as restrictions are now lifted, most fertiliser prices showed downward trends due to a global downturn in demand and uncertainty around interruptions in the meals supply chain worldwide.
AIMS, an inter-agency platform made up of G20 members, Spain and many major exporting and importing countries of agricultural commodities, was formed following a global food price hikes in 2007-08 and 2010.
"We also get $10-$15 benefits for freight transport now," said Md Sayedul Islam, chairman of the state-run Bangladesh Agricultural Development Corporation (BADC), a key importer of non-urea fertilizer for the government.
"It gives a whole lot of hope," he added.
The BADC already imported a lot more than 12 lakh tonnes of TSP, MOP and DAP in fiscal 2019-20 as the BFA imported 10 lakh tonnes of non-urea fertilisers through the same period.
Private importers will take into account six lakh tonnes of DAP and two lakh tonnes of MOP within the next fiscal year, said BFA Chairman Kamrul Ashraf Khan Poton.
However, the federal government have yet to fix the amount of non-urea fertilisers to be imported by BADC next fiscal year, he added.
As the BADC and private importers import non-urea fertilisers, the state-owned Bangladesh Chemical Industries Corporation imports urea as domestic production for the merchandise falls short of the country's gross annual requirement.
