Conundrum of fertiliser price and its supply
Saturday, 3 November 2007
Newspapers and electronic media often carry reports on how the fertiliser-hungry farmers wait for long hours and even days in queue in front of the dealers' shop to get fertiliser during cropping seasons. This common sight points to a kind of crisis in the supply of the fertiliser in the country. The government, however, would instantly contest such suggestion saying that adequate amount of fertiliser is stockpiled in its depots. If that is the case, which is also not untrue, then why is it that scarcity of fertiliser is so visible in the market, a fact that is corroborated by occasional protest demonstrations by farmers with demands for this crucial agricultural input during cropping seasons?
The root cause of the crisis lies in the fact that fertiliser is not sold in the open market at a competitive price. But then, had it been the case, the price of fertiliser would be so high that the poor farmers would have to give up farming altogether and look for other vocations. That is why the government has to provide huge amounts of subsidy to keep the price of fertilisers within the reach of the farmers. The price at which fertiliser is being supplied to the farmers is far lower than its production cost at home. The same is also true for the fertilisers imported from abroad, in which case the government has to provide still higher amount of subsidy.
Under the circumstances, one should not be surprised when this crucial agricultural input is made available to the farmers through controlled market through dealers. Small wonder fertiliser is smuggled out of the country through illicit cross-border trade since the item is dearer on the other side of the border.
Statistics provided by the government on the volumes and costs of domestically produced as well as imported fertilisers and the amount of subsidies it has to give before making them available to the farmers through the dealers will render a clearer picture of the situation. The government is providing Tk 2,400 as subsidy to each metric ton of locally-produced urea, while the amount is Tk 25,700 per metric ton of the imported one. It sells locally produced urea at Tk 4,800 per metric ton, whereas its production cost is Tk 7200. The cost of per metric ton of the imported urea, on the other hand, is Tk 31,000, but it is sold at Tk 5,300 per metric ton to the farmers. So, it is not surprising that unscrupulous quarters would take advantage of the existing huge gap between real and controlled price of fertilisers to create an artificial crisis in the market, or sell spurious fertilisers in the market at a cheaper rate.
It is against this backdrop that the agricultural adviser has tried to dispel fear of any price hike of fertilisers in the near future in response to the remarks made by industries secretary that the country's fertiliser crisis would never end unless its current prices were increased. On this score, the agriculture adviser, however, informed the media personnel that there was sufficient stock of fertiliser in the government depots at the moment to meet the entire demand for fertiliser in the current fiscal. And to ensure smooth supply of this agricultural input to the farmers during the imminent Boro-cropping season in particular, the government has strengthened monitoring and supervision as well as mounted guard by the army, navy, coast guard and BDR to check cross-border smuggling of fertiliser. All these reassuring facts and figures on the fertiliser situation provided by the government notwithstanding, the reality on the ground is not so comforting. The farmers would continue to feel insecure about smooth supply of fertiliser during the cropping season until and unless the distribution channels for supplying the same to the field are made foolproof.
The root cause of the crisis lies in the fact that fertiliser is not sold in the open market at a competitive price. But then, had it been the case, the price of fertiliser would be so high that the poor farmers would have to give up farming altogether and look for other vocations. That is why the government has to provide huge amounts of subsidy to keep the price of fertilisers within the reach of the farmers. The price at which fertiliser is being supplied to the farmers is far lower than its production cost at home. The same is also true for the fertilisers imported from abroad, in which case the government has to provide still higher amount of subsidy.
Under the circumstances, one should not be surprised when this crucial agricultural input is made available to the farmers through controlled market through dealers. Small wonder fertiliser is smuggled out of the country through illicit cross-border trade since the item is dearer on the other side of the border.
Statistics provided by the government on the volumes and costs of domestically produced as well as imported fertilisers and the amount of subsidies it has to give before making them available to the farmers through the dealers will render a clearer picture of the situation. The government is providing Tk 2,400 as subsidy to each metric ton of locally-produced urea, while the amount is Tk 25,700 per metric ton of the imported one. It sells locally produced urea at Tk 4,800 per metric ton, whereas its production cost is Tk 7200. The cost of per metric ton of the imported urea, on the other hand, is Tk 31,000, but it is sold at Tk 5,300 per metric ton to the farmers. So, it is not surprising that unscrupulous quarters would take advantage of the existing huge gap between real and controlled price of fertilisers to create an artificial crisis in the market, or sell spurious fertilisers in the market at a cheaper rate.
It is against this backdrop that the agricultural adviser has tried to dispel fear of any price hike of fertilisers in the near future in response to the remarks made by industries secretary that the country's fertiliser crisis would never end unless its current prices were increased. On this score, the agriculture adviser, however, informed the media personnel that there was sufficient stock of fertiliser in the government depots at the moment to meet the entire demand for fertiliser in the current fiscal. And to ensure smooth supply of this agricultural input to the farmers during the imminent Boro-cropping season in particular, the government has strengthened monitoring and supervision as well as mounted guard by the army, navy, coast guard and BDR to check cross-border smuggling of fertiliser. All these reassuring facts and figures on the fertiliser situation provided by the government notwithstanding, the reality on the ground is not so comforting. The farmers would continue to feel insecure about smooth supply of fertiliser during the cropping season until and unless the distribution channels for supplying the same to the field are made foolproof.