The government now raised price of urea fertiliser by 37.5 per cent to Tk 22 a kilogram, amid supply crunch, which is deemed a blow for farmers in this peak period of Aman planting.
Meanwhile, supply shortage has forced the country to consume urea from its usual buffer stock which is meant for only emergencies, said insiders Monday after the upward price re-fixing.
Usually Bangladesh keeps around 0.8 million tonnes of the key farming input in its buffer stock and it has now 0.725 million tonnes of storage, said officials.
Experts, however, say apart from the global price hike, fuelled by supply-chain disruptions by pandemic and war, the hike in urea price might be Bangladesh's response to IMF preconditions binding a $4.5 billion loan.
However, farmers across the country were already counting additional Tk 6.0 to Tk 10.0 per-kg urea while the decision might fuel the market rates further.
The agriculture ministry through a notification issued Monday raised the price of urea to Tk 22 from existing Tk 16.
Dealers will have to pay Tk 20 now, up from Tk 14, says the notification.
"Global price hike three to four times in a year forces the government to adjust the price," says the notification.
Despite the latest adjustment, the government is still giving subsidy of Tk 59 per kg on urea, says a press release of the ministry, which was given as an explanation of the measure.
It says the current price of urea fertiliser per kg on the international market is Tk 81.
However, the agriculture ministry says there is sufficient stock of all kinds of fertilisers in the country against the demand for now as it has 0.727 million tonnes of urea against a demand for 0.619 million tonnes for Aman season from July to September.
Other fertilisers such as TSP has stock of 0.3 million tonnes against demand for 0.1 19 million tonnes, DAP 0.634 million tonnes when demand is 0.225 million tonnes and MOP stock 0.210 million tonnes against demand for 0.137 million tonnes.
However, officials at the agriculture ministry and industry ministry said the government usually keeps a buffer stock of .08 million tonnes of urea to meet exigencies.
Asked, agriculture secretary Md Sayedul Islam recognised that the stock the ministry was talking about was the buffer stock.
But he said, "There will be no crisis of urea in the country as required quantity of fertiliser will be imported while a notable volume will be got from local factories."
Director (commercial) at the Bangladesh Chemical Industries Corporation (BCIC) Kazi Mohammad Syful Islam also admitted that the urea stock is now less than the usual buffer stock of 0.8 million tonnes.
"But the supply will increase significantly from this month as there is a good quality in the pipeline," he says.
"Today (Monday) we've finalised another 60,000 tonnes of import from KSA," he adds.
Distinguished fellow at the Centre for Policy Dialogue (CPD) Dr Debapriya Bhattacharya says in order to access the IMF loan Bangladesh will have to establish its credibility by taking 'some prior actions' that usually entail taking measures which may have created the financial or fiscal crisis.
"In the particular context, the IMF possibly holds a view that the high rate of subsidies in delivering some publicly-produced goods may be beyond the fiscal capacity of the government," he said.
It would be possibly necessary for the government to contain its subsidy-related expenditures.
The fuel price and subsidies for fertiliser and electricity are the usual items for any IMF conditionality for prior action in this regard, according to him.
"It may very well be possible the price adjustment which has been made and may be related to one of those prior actions. Obviously, it may have some sobering impacts on fiscal side and other implications on the agriculture production," Mr Bhattacharya adds.
Farm economist Prof Golam Hafeez Kennedy feels that the hike in fertiliser price might make rice pricier further.
He says farmers across the country will count minimum Tk 4.2 million additionally for the hike.
Keeping checks and balances in paddy and rice prices for both the farmers and the consumers will be toughest job for the government, he notes.
"But the government will have to ensure sound supply of the input first for the food security of the country as the Aman season covers 38 per cent of the rice demand."
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