Fertiliser subsidies to rise in FY23

The government is set to increase agricultural subsidies by Tk 4,901 crore in the upcoming national budget for the 2022-23 fiscal year to keep the fertiliser prices stable.

The move has come after the recent rise in the global fertiliser prices put a lot of pressure on the next fiscal’s agricultural sector expenditure.

According to Finance Ministry sources, the government will allocate Tk 15,000 crore only to use as agricultural subsidies and incentives in the next budget.

In the outgoing FY2021-22, it was projected that Tk 10,099 crore would be needed for agricultural subsidies. Of that, Tk 9,500 crore was only for fertiliser. At the end of April this year, the total amount of subsidies reached nearly Tk 13,332 crore following an abnormal hike in import costs.

After global prices went up, Agriculture Minister Muhammad Abdur Razzaque had said that Tk 28,000 crore in subsidies would be needed to ensure fertiliser supply this fiscal.

Generally, the government allocates Tk 8,000-9,000 crore for this every year.

Finance Ministry sources said, even though the government plans to allocate Tk 15,000 crore in subsidies, the real amount will be around Tk 30,000 crore. In the next budget, the government will keep subsidies under control through the “carry forward system.”

According to the World Bank’s Commodity Markets Outlook for April, fertiliser prices went up by 80 per cent in 2021 and nearly 30 per cent until April 2022.

Urea fertiliser price in the international market has increased from Tk 32 to Tk 96 per kg. At the same time, triple superphosphate (TSP) fertiliser price went up from Tk 33 to Tk 70, muriate of potash (MOP) price jumped to Tk 54 from Tk 23, and diammonium phosphate (DAP) price was hiked to Tk 93 from Tk 37.

This fiscal, the annual local demand for fertiliser is 57.5 lakh tonnes, including 26 lakh tonnes of urea. State-owned mills produce 10 lakh tonnes of urea and the rest is imported.

The government imported the fertilisers at a higher cost but decided to not hike the local prices considering the farmers’ interests and to ensure food security.

Under the circumstances, the Prime Minister’s Officer also did not go for adjusting the prices in line with a proposal from the Finance Ministry. According to Finance Division officials, the decision was taken to avoid inconvenience to the farmers before the national election.

The Agriculture Ministry hopes the income of agriculture sector people will increase and the inflation will remain under control as the government has projected that the foodgrain production will be higher than the target.