Price hike of fertiliser and subsidy issue
Sunday, 21 October 2007
Shahiduzzaman Khan
THERE has been significant rise in the prices of fertiliser in the international market. As such, Bangladesh will have to spend additional amount of money to purchase it from oversees sellers. In this way, the government will have to face an extra budgetary pressure this fiscal year.
According to an Agriculture Ministry estimate, the volume of subsidy on fertiliser could reach Tk 40 billion for the fiscal year (FY) 2007-08 against the previous projection of Tk 25 billion. This year, the government will have to spend an additional Tk 15 billion for selling fertiliser, especially urea, to the farmers at subsidised rates.
As the current global fertiliser market has registered a phenomenal rise, the import of per tonne of urea could cost Tk 1200 while the government sells the item at about Tk 6000 per tonne or Tk 300 per 50-kg bag. Since the government needs to import an increased volume of urea this year for meeting the country's demand, the amount of subsidy will go up significantly.
According to the Agriculture Ministry sources, the government has already decided to import a record 1.35 million tonnes of urea fertiliser for the fiscal 2007-08. The volume is nearly 0.5 million tonnes higher than last year's urea import. Earlier, the government imported about 0.82 million tonnes of urea in the last fiscal against its target of 0.9 million tonnes.
Of the total target, the government will procure 0.45 million tonnes of urea from the Karnaphuli Fertiliser Company Limited (KAFCO) while the remaining 0.9 million tonnes will be imported from abroad. A high-powered monitoring committee on fertiliser, headed by Education Adviser Auyub Quadri, at its recent meeting had revised the government's fertiliser import target by nearly 0.3 million tonnes against its previous projection. The committee had revised the import target, taking a possible shortfall in the domestic urea output coupled with a growing demand for the item.
The meeting was told that the local urea output would decline to 1.5 million tonnes in the current fiscal against the target of 1.7 million tonnes due to a suspension of production at the 0.2-million capacity of Palash Urea factory in Ghorashal. On the other hand, the demand for urea has been estimated at over 2.8 million tonnes for the current fiscal.
Meanwhile, crisis of urea fertiliser has already been reported in different parts in the country against the backdrop of an enhanced demand for the main agricultural input in the current 'aman' cropping season. With the farmers already smarting from shortage of diesel and power, an anticipated shortage of fertiliser is likely to add to the miseries of the peak aman season. Though the government claims show no supply dearth of urea, farmers across the country are venting their scepticism about its availability in time.
However, Bangladesh Fertiliser Association (BFA) maintained that though there was no supply dearth, the government's buffer stocks for fertiliser were not adequately replenished for tackling the sudden surge of urea demand from next month. Moreover, due to the fuel crisis at certain points, trucks are now charging double fares for carrying urea from factories and buffer godowns to the retailers' level.
Meanwhile, failure of the industries ministry to act timely on repeated warnings by the agriculture ministry about shortage of fertiliser led to its crisis, it was revealed. The agriculture ministry last year warned the industries ministry about the shortage of fertiliser mentioning its stock position against the demand for it, and saying the stock was the lowest in eight years. But the ministry failed to meet the shortage through import and local production in time that led to the fertiliser crisis.
Newspaper reports often highlighted the precarious condition of the unfortunate but otherwise resilient farmers of the northern region who are trying to procure fertiliser desperately by even purchasing it from black market at exorbitant prices. In fact, their demand is very nominal. They may bring out rallies and demonstrate before agriculture officers' offices occasionally. But they will never go beyond that. They buy fertiliser and diesel at high prices and go for plantation only to find later that they are not getting fair prices of their produces. They blame their own fate for the disaster and never go for hard action.
When such is the situation, should the government machinery confine its activities to forming various committees only? Is there any coordination on the fertiliser distribution issue in real sense of the term? The government has set up a fertiliser depot at the city's outskirt -- Aminbazar. It is reported that smooth transportation of fertiliser from Aminbazar to northern districts is being disrupted at many points. If that is the case, why is the government not setting up more depots in the northern region? Baghabari, Syedpur, Bogra etc., might be the sites of such depots.
The government claims that there are adequate fertiliser its reserve stock -- and there is no reason for getting worried. But the important thing is the supply arrangements have to be smooth and quick. Adequate supply of fertiliser to the grassroots level must be ensured. Farmers must get it ahead of their plantation. Side by side, irrigation activities need to be geared up to support the soil condition for farming.
Added to the persistent woes, supply of fuel oil is also being disrupted at various points. Farmers are also complaining about shortage of diesel and its high price. Diesel is also being smuggled out to the neighbouring countries. The government claimed that due to increased surveillance by the BDR, the RAB and the police force, smuggling of the diesel to India is minimum this year. Since diesel price is high in India compared to Bangladesh, a section of black marketeers tend to smuggle it to India for reaping high profits. Farmers are not interested to listen to whether there is a reduction in smuggling of diesel or not, they are only interested in getting steady supply of the same. The government must be agriculture-friendly, because it is the agriculture that dominates the country's economy. Survival of millions of people depends on this hefty agriculture. It should not be undermined at any cost.
Bangladesh needs a harmonised society that ensures equal distribution of wealth and property. Inequality leads to poverty and unwarranted tension. Under the poverty reduction strategy paper (PRSP), there are some broad hints to minimise such inequality. Implementing agencies are working on the strategies to bring it down. Rationally, the inequality in income level and distribution of wealth are the major phenomenon that challenges the country's economic outlook. Nevertheless, the country must rely on its own manpower, expertise and indigenous methods to bring down poverty to its minimum level.
The farmers not only face shortage of fertiliser and diesel during the whole farming season, they also confront seed crisis, drought and excess rains very often. Nature makes them so vulnerable that they throw their own fate at its mercy. It is a never-ending process that moulds their life and reasons. Here science is just a mute spectator. Country's 80 per cent people live on agriculture. Without a revolution in agriculture, country's overcall economic improvement is highly an improbable proposition. Besides raising industrial production, emphasis needs to be given to adequate improvement in agriculture. Agriculture is the mainstay of the country's economy. Therefore, it must not be undermined at all.
THERE has been significant rise in the prices of fertiliser in the international market. As such, Bangladesh will have to spend additional amount of money to purchase it from oversees sellers. In this way, the government will have to face an extra budgetary pressure this fiscal year.
According to an Agriculture Ministry estimate, the volume of subsidy on fertiliser could reach Tk 40 billion for the fiscal year (FY) 2007-08 against the previous projection of Tk 25 billion. This year, the government will have to spend an additional Tk 15 billion for selling fertiliser, especially urea, to the farmers at subsidised rates.
As the current global fertiliser market has registered a phenomenal rise, the import of per tonne of urea could cost Tk 1200 while the government sells the item at about Tk 6000 per tonne or Tk 300 per 50-kg bag. Since the government needs to import an increased volume of urea this year for meeting the country's demand, the amount of subsidy will go up significantly.
According to the Agriculture Ministry sources, the government has already decided to import a record 1.35 million tonnes of urea fertiliser for the fiscal 2007-08. The volume is nearly 0.5 million tonnes higher than last year's urea import. Earlier, the government imported about 0.82 million tonnes of urea in the last fiscal against its target of 0.9 million tonnes.
Of the total target, the government will procure 0.45 million tonnes of urea from the Karnaphuli Fertiliser Company Limited (KAFCO) while the remaining 0.9 million tonnes will be imported from abroad. A high-powered monitoring committee on fertiliser, headed by Education Adviser Auyub Quadri, at its recent meeting had revised the government's fertiliser import target by nearly 0.3 million tonnes against its previous projection. The committee had revised the import target, taking a possible shortfall in the domestic urea output coupled with a growing demand for the item.
The meeting was told that the local urea output would decline to 1.5 million tonnes in the current fiscal against the target of 1.7 million tonnes due to a suspension of production at the 0.2-million capacity of Palash Urea factory in Ghorashal. On the other hand, the demand for urea has been estimated at over 2.8 million tonnes for the current fiscal.
Meanwhile, crisis of urea fertiliser has already been reported in different parts in the country against the backdrop of an enhanced demand for the main agricultural input in the current 'aman' cropping season. With the farmers already smarting from shortage of diesel and power, an anticipated shortage of fertiliser is likely to add to the miseries of the peak aman season. Though the government claims show no supply dearth of urea, farmers across the country are venting their scepticism about its availability in time.
However, Bangladesh Fertiliser Association (BFA) maintained that though there was no supply dearth, the government's buffer stocks for fertiliser were not adequately replenished for tackling the sudden surge of urea demand from next month. Moreover, due to the fuel crisis at certain points, trucks are now charging double fares for carrying urea from factories and buffer godowns to the retailers' level.
Meanwhile, failure of the industries ministry to act timely on repeated warnings by the agriculture ministry about shortage of fertiliser led to its crisis, it was revealed. The agriculture ministry last year warned the industries ministry about the shortage of fertiliser mentioning its stock position against the demand for it, and saying the stock was the lowest in eight years. But the ministry failed to meet the shortage through import and local production in time that led to the fertiliser crisis.
Newspaper reports often highlighted the precarious condition of the unfortunate but otherwise resilient farmers of the northern region who are trying to procure fertiliser desperately by even purchasing it from black market at exorbitant prices. In fact, their demand is very nominal. They may bring out rallies and demonstrate before agriculture officers' offices occasionally. But they will never go beyond that. They buy fertiliser and diesel at high prices and go for plantation only to find later that they are not getting fair prices of their produces. They blame their own fate for the disaster and never go for hard action.
When such is the situation, should the government machinery confine its activities to forming various committees only? Is there any coordination on the fertiliser distribution issue in real sense of the term? The government has set up a fertiliser depot at the city's outskirt -- Aminbazar. It is reported that smooth transportation of fertiliser from Aminbazar to northern districts is being disrupted at many points. If that is the case, why is the government not setting up more depots in the northern region? Baghabari, Syedpur, Bogra etc., might be the sites of such depots.
The government claims that there are adequate fertiliser its reserve stock -- and there is no reason for getting worried. But the important thing is the supply arrangements have to be smooth and quick. Adequate supply of fertiliser to the grassroots level must be ensured. Farmers must get it ahead of their plantation. Side by side, irrigation activities need to be geared up to support the soil condition for farming.
Added to the persistent woes, supply of fuel oil is also being disrupted at various points. Farmers are also complaining about shortage of diesel and its high price. Diesel is also being smuggled out to the neighbouring countries. The government claimed that due to increased surveillance by the BDR, the RAB and the police force, smuggling of the diesel to India is minimum this year. Since diesel price is high in India compared to Bangladesh, a section of black marketeers tend to smuggle it to India for reaping high profits. Farmers are not interested to listen to whether there is a reduction in smuggling of diesel or not, they are only interested in getting steady supply of the same. The government must be agriculture-friendly, because it is the agriculture that dominates the country's economy. Survival of millions of people depends on this hefty agriculture. It should not be undermined at any cost.
Bangladesh needs a harmonised society that ensures equal distribution of wealth and property. Inequality leads to poverty and unwarranted tension. Under the poverty reduction strategy paper (PRSP), there are some broad hints to minimise such inequality. Implementing agencies are working on the strategies to bring it down. Rationally, the inequality in income level and distribution of wealth are the major phenomenon that challenges the country's economic outlook. Nevertheless, the country must rely on its own manpower, expertise and indigenous methods to bring down poverty to its minimum level.
The farmers not only face shortage of fertiliser and diesel during the whole farming season, they also confront seed crisis, drought and excess rains very often. Nature makes them so vulnerable that they throw their own fate at its mercy. It is a never-ending process that moulds their life and reasons. Here science is just a mute spectator. Country's 80 per cent people live on agriculture. Without a revolution in agriculture, country's overcall economic improvement is highly an improbable proposition. Besides raising industrial production, emphasis needs to be given to adequate improvement in agriculture. Agriculture is the mainstay of the country's economy. Therefore, it must not be undermined at all.