Home ›› 26 Apr 2022 ›› Front
Bangladesh is going to import Muriate of Potash (MOP) fertilizer shying away from two main sources – Russia and Belarus – in the face of transaction problems.
Sources said switching to other sources to import the essential component will cost more than $1,200 per metric tonne.
According to the IndexMundi – a comprehensive data portal with country-level facts and statistics – the MOP Price was $ 202.5 per metric tonne in April 2021 which rose to $562.5 by the end of March this year.
The Ministry of Agriculture opened tender allowing private importers to submit documents for MOP import by April 13. However, it did not specify how many metric tonnes would be imported this time.
According to the tender documents, the last date of shipping is fixed on July 30 this year.
The ministry sources confirmed that the importers bid $1,250 to $1,500 for per metric tonne MOP.
In the national dialogue on global price volatility on April 24, Agriculture Minister Abdur Razzaque confirmed the price in tender.
“Earlier, per metric tonne MOP cost $300 while currently it went up to $1,200 in the tender,” according to the minister.
At the same programme, The City Bank Managing Director and CEO Mashrur Arefin claimed that they were a big player of MOP import but this time they are not being able to do so since they can’t make transaction with Belarus.
“The current price of MOP in the international market ranges between $1,150 and $1,220. The price is increasing by $50 every week,” said Balai Krishna Hazra, additional secretary to the Ministry of Agriculture.
“Russia, Canada and Belarus are the three main sources of MOP. The next year import from both Belarus and Russia is uncertain due to transaction problem,” he told The Business Post.
“We directed importers not to submit proposal for importing from these two countries.”
The country needs 7.7 lakh metric tonnes of MOP every year, according to the data of the Ministry of Agriculture.
The United States of America imposed sanction on the state-owned JSC Belaruskali and its potash-exporting arm, Belarusian Potash Company JSC, in December 2021.
From February 1, Lithuania stopped letting Belarus use the port of Klaipeda, largely in response to the US sanctions.
Analysts said the Lithuanian port handled over 90 per cent, or about 10.8 million metric tonnes of Belarus' annual potash exports.
The EU gave sanction on Belarusian Potash import following the US.
All this sanctions made the MOP import impossible from Russia and Belarus.
It is not possible to send dollar to Russia and Belarus as swift will not allow any transaction due to sanctions.
Sources said potato cultivation mainly depends on MOP; the fertilizer is also needed for paddy. If per metric tonne is imported at $1200, per kg import price will reach Tk 103.59.
In Fiscal Year 2020-21, per kg MOP import price was Tk 23 which reached Tk 54 in FY 2021-22. For FY 2022-23, the price is exceeding Tk 100.
For years the government sells per kg MOP at Tk 15 to farmers while the remaining cost is borne as subsidy which keeps increasing.
In the next fiscal year, MOP subsidy per kilogramme will be above Tk 88 which will be more than double the current amount of subsidy.
According to Bangladesh Fertilizer Association, its members import around 14 lakh metric tonnes of non-urea annually, which is 40 per cent of local demand.
The remaining 60 per cent is imported by Bangladesh Agricultural Development Corporation.
The country has an annual demand for 57.5 lakh metric tonnes of fertilizer, of which urea accounts for 26 lakh metric tonnes and non-urea the rest.
“There are other sources of MOP import like Azerbaijan, Turkmenistan and Jordan, but there is a doubt that all importers will be able to source fertilizer from these countries,” said Riaz Uddin Ahmed, executive secretary, Bangladesh Fertilizer Association.
“The freight cost went up by many times due to Russia-Ukraine war. Now many importers need to source MOP from Canada. If sourced from there, carrying cost will be double due to distance.”
The government has been offering a big amount of subsidy to fertilizer for years.
It gave Tk 7,683.61 crore in subsidy in 2019, Tk 6,875.59 crore in 2020 and Tk 7,717 crore last year.
It increased subsidy in fertilizer sector to Tk 9,500 crore in the current fiscal year.
