Body to finalise suggestions on urea price hike, its impact
Sunday, 8 July 2007
FE Report
The high powered committee on fertiliser price will sit on July 11 to finalise their recommendations on the proposed price hike of urea and with its assessment of the impact of the hike on the farming level.
The committee had earlier recommended to the government to raise the urea price to Tk 7,000 per tonnes instead of current price of Tk 4,800 on locally produced urea and Tk 8,000 per tonnes against current price of Tk 5,300 on imported ones.
After the committee's recommendations, however, the cabinet committee on economic affairs at its meeting last month directed the government to ask the committee to review its recommendations on price hike further and its impact on farmers level.
The committee was asked to place the final recommendations to the government soon. The government formed the high-power committee, headed by the Industries Secretary Dr Nurul Amin to review the matter.
A member of the committee requesting anonymity told the FE: " We will sit on July 11 to finalise the recommendations on the impact of crops cultivations for the proposed new price of urea in the domestic markets. I think we will be able to finalise our recommendations on that day for placing before the government."
The country's total demand for Urea is over 2.8 million tonnes per year. Out of total 2.8 million tonnes of requirement, the government imports around 1.1 million tonnes and the rest 1.7 million tonnes are produced in the local six state-owned factories.
Following the enormous price hike in the international markets and a huge loss on the fertiliser production and import, the government took a move to increase the price of the agricultural input at the retail level from the next season.
The price of urea in the global market is US$ 370 to $390 per tonne instead of $230 to $260 per tonnes three to four months ago.
The member of the committee said, "If the government can raise the price of urea in the domestic market at the rate proposed in the recommendation, the loss would be reduced by Tk 6.71 billion."
He said that if the government imports urea at the present market value of $380 per tonne (1000kg), import cost of per bag (50kg) urea would stand at around Tk 1400.
"On the contrary, the government is now selling urea at Tk 310 to 315 per bag to the dealers providing huge subsidy on the item. So, there is no option except increasing its price at the retail level," he opined.
Meanwhile, President of the Bangladesh Fertiliser Association, Kafil Uddin Ahmed told the FE: "If the government does not increase the price of urea in the domestic market and does not set up more fertiliser factories in the country, it will have to bear huge losses on the import in future days."
With the growing price urea in the international market, at one time the government would not able to bear the loss by selling the urea at lower price to the farmers than the increased import cost, he added.
Supporting the recommendation to increase the price of urea, Ahmed said that if the price was raised, the loss of the government would be reduced, excessive use of urea by the farmers would decrease and cross-border smuggling would stop.
"Besides, funds that will be saved after the price hike can be utilised to set up new fertiliser factory in the country," he opined adding, the government should go for installing new factory to avert the huge loss to the public sector.
The high powered committee on fertiliser price will sit on July 11 to finalise their recommendations on the proposed price hike of urea and with its assessment of the impact of the hike on the farming level.
The committee had earlier recommended to the government to raise the urea price to Tk 7,000 per tonnes instead of current price of Tk 4,800 on locally produced urea and Tk 8,000 per tonnes against current price of Tk 5,300 on imported ones.
After the committee's recommendations, however, the cabinet committee on economic affairs at its meeting last month directed the government to ask the committee to review its recommendations on price hike further and its impact on farmers level.
The committee was asked to place the final recommendations to the government soon. The government formed the high-power committee, headed by the Industries Secretary Dr Nurul Amin to review the matter.
A member of the committee requesting anonymity told the FE: " We will sit on July 11 to finalise the recommendations on the impact of crops cultivations for the proposed new price of urea in the domestic markets. I think we will be able to finalise our recommendations on that day for placing before the government."
The country's total demand for Urea is over 2.8 million tonnes per year. Out of total 2.8 million tonnes of requirement, the government imports around 1.1 million tonnes and the rest 1.7 million tonnes are produced in the local six state-owned factories.
Following the enormous price hike in the international markets and a huge loss on the fertiliser production and import, the government took a move to increase the price of the agricultural input at the retail level from the next season.
The price of urea in the global market is US$ 370 to $390 per tonne instead of $230 to $260 per tonnes three to four months ago.
The member of the committee said, "If the government can raise the price of urea in the domestic market at the rate proposed in the recommendation, the loss would be reduced by Tk 6.71 billion."
He said that if the government imports urea at the present market value of $380 per tonne (1000kg), import cost of per bag (50kg) urea would stand at around Tk 1400.
"On the contrary, the government is now selling urea at Tk 310 to 315 per bag to the dealers providing huge subsidy on the item. So, there is no option except increasing its price at the retail level," he opined.
Meanwhile, President of the Bangladesh Fertiliser Association, Kafil Uddin Ahmed told the FE: "If the government does not increase the price of urea in the domestic market and does not set up more fertiliser factories in the country, it will have to bear huge losses on the import in future days."
With the growing price urea in the international market, at one time the government would not able to bear the loss by selling the urea at lower price to the farmers than the increased import cost, he added.
Supporting the recommendation to increase the price of urea, Ahmed said that if the price was raised, the loss of the government would be reduced, excessive use of urea by the farmers would decrease and cross-border smuggling would stop.
"Besides, funds that will be saved after the price hike can be utilised to set up new fertiliser factory in the country," he opined adding, the government should go for installing new factory to avert the huge loss to the public sector.