Govt plans direct cash support to farmers on fertiliser
Shakhawat Hossain | Monday, 2 June 2008
The government would bring changes in the delivery system of subsidised fertiliser by introducing a direct cash support to farmers to better the supply chain and curb widespread misuse of the item, said a finance ministry official.
In the new system, the government will market a kg of urea fertiliser at a much higher rate than the existing Tk 6.50 from the new fiscal and will compensate the farmers with direct cash subsidy.
The official said the new price of a kg of urea and the amount of direct cash subsidy for each farmer or against production of every tonne of rice are yet to be fixed.
'The changes are inevitable to check misuse of fertiliser and streamline the existing supply system,' said the official.
Due to heavily-subsidised price, smuggling of urea into neighbouring countries is widespread. But the government has no specific data on how much urea is being smuggled out to India and Myanmar each year.
'But the amount will be substantial as price of the item is much higher in those countries than Bangladesh,' said the official.
In addition, the item is being used to substitute costly chemicals used in garment factories and other industries.
As per official estimate, about 0.2 million tonnes of urea are being used by dyeing, sugar, puffed-rice and other industrial plants, which use fertiliser to substitute costly chemicals.
Millions of farmers across the country, especially the marginal farmers, are often compelled to pay higher price than the government fixed rate due to 'price manipulation as well as creation of artificial crisis.'
The official said the new system will help the government curb any artificial crisis and improve the distribution system.
He said a policy like the existing direct diesel subsidy will be formulated to bring changes in the system of delivery of the subsidised fertilizer.
The government depends on dealers for distribution of more than 2.8 million tonnes of urea each year.
It has been selling urea at Tk 6.50 per kg in the local market for the last two decades. However, a kg urea cost the government about Tk 30 alone in the outgoing fiscal.
An industries ministry projection said the government's trade deficit on fertiliser marketing was more than Tk 31.00 billion in the 2007-08 fiscal.
The trade deficit would hit Tk 70.00 billion-plus in the next fiscal if the government does not make upward adjustment of prices of the item in the next fiscal.
The projected deficit, which is more than double, has been attributed to further price hike of fertiliser in the international market where the selling price of a tonne of urea is Tk 64,300.
The demand for urea, according to the projection, would be 2.85 million tonnes in the next fiscal. The country would produce 1.7 million tonnes while the rest would be imported.
In the new system, the government will market a kg of urea fertiliser at a much higher rate than the existing Tk 6.50 from the new fiscal and will compensate the farmers with direct cash subsidy.
The official said the new price of a kg of urea and the amount of direct cash subsidy for each farmer or against production of every tonne of rice are yet to be fixed.
'The changes are inevitable to check misuse of fertiliser and streamline the existing supply system,' said the official.
Due to heavily-subsidised price, smuggling of urea into neighbouring countries is widespread. But the government has no specific data on how much urea is being smuggled out to India and Myanmar each year.
'But the amount will be substantial as price of the item is much higher in those countries than Bangladesh,' said the official.
In addition, the item is being used to substitute costly chemicals used in garment factories and other industries.
As per official estimate, about 0.2 million tonnes of urea are being used by dyeing, sugar, puffed-rice and other industrial plants, which use fertiliser to substitute costly chemicals.
Millions of farmers across the country, especially the marginal farmers, are often compelled to pay higher price than the government fixed rate due to 'price manipulation as well as creation of artificial crisis.'
The official said the new system will help the government curb any artificial crisis and improve the distribution system.
He said a policy like the existing direct diesel subsidy will be formulated to bring changes in the system of delivery of the subsidised fertilizer.
The government depends on dealers for distribution of more than 2.8 million tonnes of urea each year.
It has been selling urea at Tk 6.50 per kg in the local market for the last two decades. However, a kg urea cost the government about Tk 30 alone in the outgoing fiscal.
An industries ministry projection said the government's trade deficit on fertiliser marketing was more than Tk 31.00 billion in the 2007-08 fiscal.
The trade deficit would hit Tk 70.00 billion-plus in the next fiscal if the government does not make upward adjustment of prices of the item in the next fiscal.
The projected deficit, which is more than double, has been attributed to further price hike of fertiliser in the international market where the selling price of a tonne of urea is Tk 64,300.
The demand for urea, according to the projection, would be 2.85 million tonnes in the next fiscal. The country would produce 1.7 million tonnes while the rest would be imported.