The prices of all types of fertilizers are going down in the international market, enabling the government to import those in a reduced price. According to Bangladesh Bank information, the import costs of fertilizers in first seven months (July-January) of the current fiscal year (2023-24) have decreased by 51 percent as compared to the same period of the previous fiscal (2022-23).

Despite the slump in import costs, farmers are having to buy the important agricultural material at the old price, say individuals concerned. As a result, the production cost in the agriculture sector has risen and profits have gone down. At the same time, food production and market are being destabilized and affecting inflation in general.

Four types of fertilizers – urea, triple super phosphate (TSP), diammonium phosphate (DAP) and muriate of potash (MOP) – are most popular in the country. Bangladesh is reliant on international market to meet the demand of these chemical fertilizers.       

Following the start of Russia-Ukraine war in 2022, the prices of fertilizers reached record high in the international market. Due to this increase, the government raised the price of urea by Tk 6 per kilogram at the farmer level in August of that year. In April, 2023, the government increased the prices of all fertilizers by Tk 5 per kg. At present, urea sells at Tk 27 per kg, DAP Tk 21, TSP Tk 27 and a kg of MOP costs Tk 20 in the retail market.

The prices of almost all the agricultural materials have gone up in last two years, say agricultural economists. Farmers are distressed due to the high prices of fertilizers. The increased cost of seeds and irrigation is making the matter even worse. These issues are negatively affecting the country’s agricultural output. If this situation continues the food security of the country will be at the stake. To avert such a challenge, it is important to reduce the prices of fertilizers in line with the reduced import cost. This will benefit the farmers and the prices essential food items will go down.           

“Fertilizers are the main cost in agricultural production. Irrigation is another spending. If the prices of fertilizers are reduced at the farmer level the production cost will certainly go down, benefitting both the farmers and consumers,” former Food Secretary Abdul Latif Mondal told Bonik Barta.

“Fertilizer prices were increased in two phases in 2022-23 fiscal year showing the hike in the international market. Prices have gone down now, but they are not being adjusted at the farmer level. As a result, the government could not enforce the prices it fixed for different commodities as the production cost could not be lowered,” he added.

Currently, the prices of urea and MOP fertilizers have gone down by more than half. According to information from World Bank’s updated regular report on international market named ‘Pink Sheet’, the price of every ton of urea in first quarter (January-March) of 2022 was $821. Besides, the prices of DAP, TSP and MOP were $794.9, $715.6 and $851.7 respectively. In February, this year, prices of per ton urea went down to $351.3, DAP to $583.8, TSP to $454.4 and MOP to $289.04. As compared to 2022, the prices of urea fell by 57 percent, DAP by 26.5 percent, TSP by 36.5 percent and MOP by 66 percent.     

According to Ministry of Agriculture, the demand of urea for the current fiscal year has been set at 2.7 million tons. Besides, the demand of TSP is 750,000 tons, DAP 1.6 million tons and MOP 900,000 tons. Of the total demand, Bangladesh Chemical Industries Corporation (BCIC) produces 1 million tons of urea, 100,000 tons of TSP and 100,000 tons of DAP in the country. Besides, as of March 15 of the ongoing fiscal, a total of 4.596 million tons of fertilizers were imported, including 1.585 million tons of urea, 672,000 tons of TSP, 1.305 million tons of DAP and 1.034 tons of MOP.              

Statistics from National Board of Revenue (NBR), however, shows that the country imported more fertilizers than the demand in first nine month (July-March) of the ongoing fiscal. A total of 5.44 million tons of urea, TSP, MOP and DAP fertilizers were imported during the period at a cost of Tk 275.26 billion. Of them, 1.919 million tons of urea at a cost of Tk 82.23 billion, 758,000 tons of TSP with Tk 41.23 billion, 1.354 million tons of MOP priced at Tk 58.04 billion and 1.408 million tons of DAP were purchased.

According to Bangladesh Bank, 5.409 million metric tons of fertilizers were imported in 2022-23 fiscal year. The country spent $3.8867 billion in importing fertilizers in first seven months (July-January) of the fiscal. And, in the first seven months of the current fiscal (2023-24), the import cost of fertilizers stood at $1.8886, a drop of 51.4 percent.         

Fertilizers are imported both at government and private levels. Among the government entities, there are Bangladesh Chemical Industries Corporation (BCIC) and Bangladesh Agriculture Development Corporation (BADC). The whole of urea fertilizer is imported by BCIC. These two government organizations may import fertilizers whenever they want. Private entities, however, can import fertilizers through participating in tender in the month of May.

Private importers of fertilizers say that though the prices fell in the international market, its benefits are yet to be realized because they can only import in May after going through the tender process. “Tender was invited in last May. Letter of credit (LC) must be opened within seven days of the tender. But, the prices were high at that time,” said Riaz Uddin Ahmed, executive secretary of Bangladesh Fertilizer Association (BFA), the organization for the private importers and producers.

“And, we faced a huge challenge in importing fertilizers due to crisis of dollar and the devaluation of Taka against dollar. Overall, our cost was very high. As the prices in the international market are low now, we might get the benefits when we will import in May,” he added.        

Officials of the Agriculture Ministry contend that the government provides huge subsidy for urea and non-urea fertilizers. Over Tk 570 billion was provided as subsidy in six years from 2017-18 fiscal to 2022-23. In the 2022-23 budget, it was declared that a subsidy of Tk 160 billion would be provided.

At present, the country has a stock of 189,523 tons of urea, 40,120 tons of TSP, 84,102 tons of DAP and 43,881 tons of MOP, say sources at the Department of Agricultural Extension (DAE). There was a stock of 155,985 tons of urea, 42,512 tons of TSP, 81,505 tons of DAP and 32,444 tons of MOP at the same time of last year.

About cutting down the prices of fertilizers, Dr Shah M Helal, additional secretary of the Ministry of Agriculture, told Bonik Barta, “It is a decision to be taken by the policymakers of the government. We are yet to receive any directive in this regard.”