Fertilisers-costlier yet indispensable
Shamsul Huq Zahid | Monday, 7 July 2008
It seems that the sky is the limit for the ongoing bout of fuel price increase. Some market analysts say that the price might soar to US dollar 200 a barrel within this year. Nobody knows what would happen next. But this hike, meanwhile, has pushed up the prices of whole range of other commodities as well. And chemical fertilisers are at the top of the table.
In keeping with 100 per cent rise in the prices of oil in the international market over a period of last one year, the prices of all chemical fertilisers have more than doubled. But in the last four years' time, the increase in prices of nitrogenous, phosphates and potash fertilisers had been phenomenal -- a four-fold rise.
The price of phosphates has increased from US$ 239 to $ 1270 per tonne between fiscal 2003-04 and fiscal 2007-08, while that of potassium from $ 97 in 2003-04 to $540 per tonne in 2007-08. The price of the most extensively used fertiliser, urea, soared to $ 645 in 2007-08 from $ 154 a tonne in 2003-04. The reason for urea prices going up has been an increase in the prices of natural gas-the main ingredient for production of urea-in keeping with the rising prices of fuel oil in the international market.
The experts attribute the rise in fertiliser prices to a variety of factors, including low level of investment in fertiliser production across the globe over the past decade and diversion of fertiliser to produce crops meant for bio-fuels production.
The importance of fertiliser and other farm inputs has reached a new height because of the ongoing global food crisis and persistent high prices of rice in the domestic market.
In Bangladesh, more than anything else, availability of fertilisers, mainly urea, in time and in adequate quantities remains to be main problem. The incidents of agitation in rural areas over scarcity of fertilisers and even deaths due to police action on demonstrators have been galore in recent years. Dealers appointed by the government to sell urea to the farmers at subsidized price, allegedly, at times indulge in irregularities to make few extra bucks. However, that is nothing unusual in Bangladesh conditions. Such practices will continue to happen albeit in a reduced scale even under the most efficient and strict administration.
But what has emerged as an issue of great concern for the government is the rising subsidy bill on account of fertiliser marketing. Though, the government has increased the price of fertilisers marginally, the government will have to count a hefty sum of money as fertiliser subsidy. However, compared to the amount given as fertiliser subsidy in India -- nearly Rs.900 billion, which more than the total size of the Bangladesh's national budget for the current fiscal -- the subsidy provided by the Bangladesh is very small. But if seen in the context of the size of the Bangladesh economy, the subsidy on account of fertiliser and fuel meant for farming is a burden on the government. However, the government cannot do away with such burden for the sake of higher food production. In the backdrop of global food scenario, it has become a pressing need for the country to achieve self-sufficiency at any cost.
It should be still fresh in the memory of all concerned how the government only a few months back knocked at the doors of the food exporting countries seeking to import rice. But the latter refused. The one which agreed after a lot of dilly-dallying has failed to reach the rice it committed to export in time.
However, self-sufficiency in food production will not come automatically. In case of Bangladesh where land- man ratio is one of the lowest in the world and natural disasters are recurrent events, achieving self sufficiency will be even harder. The government has to prepare a proper land-use plan, reinvigorate the population control programme and ensure adequate amount of funds for subsidising agricultural inputs if it really meants business in terms of higher production.
What the farmers, most of whom are small and marginal, need are inputs such a fertilisers, seed and fuel at an affordable cost and a fair price for their produce. It seems that getting fair price for food crops would not be that problem, at least, in the coming years. But what they do need desperately are fertiliser, fuel and seeds in time and in right quantities at subsidized prices.
The government from the last fiscal introduced 'targeted' subsidy in case of fuel. It allocated Tk. 9.0 billion for distribution of diesel at subsidized price during the last Aman season but ended up with the distribution of Tk 2.5 billion as cash subsidy among the farmers. However, the money was disbursed after the harvest of the Aman crop. Besides, there are plenty of allegations that a large size of the subsidy funds reached the wrong hands.
The caretaker administration is contemplating direct cash transfers to farmers as subsidy to fertilisers because of the fact only a fraction of subsidies intended to help the farmers actually reaches them. Moreover, subsidized fertilisers, mainly urea, are, reportedly smuggled out to neighbouring India and Myanmar where the prices of the same are higher.
However, some people are against cash transfer because of administrative bottlenecks. Yet if the government can remove those bottlenecks, cash transfer remains to be best way to help the growers, particularly the small and marginal ones. But the cash money should be made available when the farmers need to buy fertilisers, not after harvesting the crops. Otherwise, the farmers, in many cases, would have to borrow money from the rural money lenders at exorbitant rates of interest.
There is no denying that subsidized availability of fertilisers, particularly urea, has led to their indiscriminate and imbalanced use. Such application instead of helping the farmers to get higher yield has been contributing to the loss of soil fertility and potential environmental hazards. This is very evident from the fact that the quantity of urea used on a particular plot of land five years back has doubled or tripled to ensure the same production. Many experts recommend the use of organic fertilisers. But that seems to be not that effective to get the expected yields. However, there could be combined application of chemical and organic fertilisers. The use of urea efficiency in Bangladesh is considered low. The use of 'gooti' urea, known as deep urea placement, needs to extensively popularized to help get higher yield at less cost.
In keeping with 100 per cent rise in the prices of oil in the international market over a period of last one year, the prices of all chemical fertilisers have more than doubled. But in the last four years' time, the increase in prices of nitrogenous, phosphates and potash fertilisers had been phenomenal -- a four-fold rise.
The price of phosphates has increased from US$ 239 to $ 1270 per tonne between fiscal 2003-04 and fiscal 2007-08, while that of potassium from $ 97 in 2003-04 to $540 per tonne in 2007-08. The price of the most extensively used fertiliser, urea, soared to $ 645 in 2007-08 from $ 154 a tonne in 2003-04. The reason for urea prices going up has been an increase in the prices of natural gas-the main ingredient for production of urea-in keeping with the rising prices of fuel oil in the international market.
The experts attribute the rise in fertiliser prices to a variety of factors, including low level of investment in fertiliser production across the globe over the past decade and diversion of fertiliser to produce crops meant for bio-fuels production.
The importance of fertiliser and other farm inputs has reached a new height because of the ongoing global food crisis and persistent high prices of rice in the domestic market.
In Bangladesh, more than anything else, availability of fertilisers, mainly urea, in time and in adequate quantities remains to be main problem. The incidents of agitation in rural areas over scarcity of fertilisers and even deaths due to police action on demonstrators have been galore in recent years. Dealers appointed by the government to sell urea to the farmers at subsidized price, allegedly, at times indulge in irregularities to make few extra bucks. However, that is nothing unusual in Bangladesh conditions. Such practices will continue to happen albeit in a reduced scale even under the most efficient and strict administration.
But what has emerged as an issue of great concern for the government is the rising subsidy bill on account of fertiliser marketing. Though, the government has increased the price of fertilisers marginally, the government will have to count a hefty sum of money as fertiliser subsidy. However, compared to the amount given as fertiliser subsidy in India -- nearly Rs.900 billion, which more than the total size of the Bangladesh's national budget for the current fiscal -- the subsidy provided by the Bangladesh is very small. But if seen in the context of the size of the Bangladesh economy, the subsidy on account of fertiliser and fuel meant for farming is a burden on the government. However, the government cannot do away with such burden for the sake of higher food production. In the backdrop of global food scenario, it has become a pressing need for the country to achieve self-sufficiency at any cost.
It should be still fresh in the memory of all concerned how the government only a few months back knocked at the doors of the food exporting countries seeking to import rice. But the latter refused. The one which agreed after a lot of dilly-dallying has failed to reach the rice it committed to export in time.
However, self-sufficiency in food production will not come automatically. In case of Bangladesh where land- man ratio is one of the lowest in the world and natural disasters are recurrent events, achieving self sufficiency will be even harder. The government has to prepare a proper land-use plan, reinvigorate the population control programme and ensure adequate amount of funds for subsidising agricultural inputs if it really meants business in terms of higher production.
What the farmers, most of whom are small and marginal, need are inputs such a fertilisers, seed and fuel at an affordable cost and a fair price for their produce. It seems that getting fair price for food crops would not be that problem, at least, in the coming years. But what they do need desperately are fertiliser, fuel and seeds in time and in right quantities at subsidized prices.
The government from the last fiscal introduced 'targeted' subsidy in case of fuel. It allocated Tk. 9.0 billion for distribution of diesel at subsidized price during the last Aman season but ended up with the distribution of Tk 2.5 billion as cash subsidy among the farmers. However, the money was disbursed after the harvest of the Aman crop. Besides, there are plenty of allegations that a large size of the subsidy funds reached the wrong hands.
The caretaker administration is contemplating direct cash transfers to farmers as subsidy to fertilisers because of the fact only a fraction of subsidies intended to help the farmers actually reaches them. Moreover, subsidized fertilisers, mainly urea, are, reportedly smuggled out to neighbouring India and Myanmar where the prices of the same are higher.
However, some people are against cash transfer because of administrative bottlenecks. Yet if the government can remove those bottlenecks, cash transfer remains to be best way to help the growers, particularly the small and marginal ones. But the cash money should be made available when the farmers need to buy fertilisers, not after harvesting the crops. Otherwise, the farmers, in many cases, would have to borrow money from the rural money lenders at exorbitant rates of interest.
There is no denying that subsidized availability of fertilisers, particularly urea, has led to their indiscriminate and imbalanced use. Such application instead of helping the farmers to get higher yield has been contributing to the loss of soil fertility and potential environmental hazards. This is very evident from the fact that the quantity of urea used on a particular plot of land five years back has doubled or tripled to ensure the same production. Many experts recommend the use of organic fertilisers. But that seems to be not that effective to get the expected yields. However, there could be combined application of chemical and organic fertilisers. The use of urea efficiency in Bangladesh is considered low. The use of 'gooti' urea, known as deep urea placement, needs to extensively popularized to help get higher yield at less cost.