Subsidy to eat up lion’s share

Subsidy will eat up a fat chunk of the budgetary allocation for the Ministry of Agriculture for the FY2022-23.

The budget proposed an allocation of TK24, 224 crore for the Ministry of Agriculture of which Tk16, 000 crore will be paid as fertilizer subsidy.

Only Tk8, 003 crore will be left for the ministry to spend on its entire activities including its development and operational ones.

People related to the sector said the amount of allocation increased but in fact it plummeted in terms of money inflation.

Fertilizer price is high in international market. It cannot be said at this moment how long it will remain high. “But we have failed to promote compost fertilizer and organic fertilizer and this failure has cost this huge subsidy in fertilizer, Anwar Faruk, a former agriculture secretary told The Business Post.

Per kilogramme compost or organic fertilizer price ranges from Tk16 to Tk30. “If we are able to promote them we can save a huge amount of subsidy and with the saved money we could provide more subsidies in farm mechanization, he said.

In his speech the Finance Minister said the entire subsidy for fertilizer was estimated at Tk9, 200 crore in the budget for FY2021-2022. However, compared in May 2021, TSP, prices of DAP and MOP fertilizers went up by 57 per cent, 47 per cent and 177 per cent respectively in international market.

The overall subsidy in the FY2021-2022 for all types of fertilizers stood at around Tk12, 000 crore.

As a result the government will provide Tk16, 000 crore as subsidy in the coming fiscal year, he said.

Since 2010, a total of 71,502 agro machinery has been distributed at subsidized price. The government gave 50-70 per cent of the price as subsidy.

A project worth Tk3, 020 crore has been taken up to distribute 51,300 machinery under 12 categories including combined harvesters, reapers, clippers, and power tillers,” the Finance Minister said in his budget speech.

There is no clear direction that how many machines can be distributed in the next year at subsidized prices, he said.

The budget proposed Tk3, 808 for the Ministry of Fisheries and Livestock which was Tk3, 196 for the current fiscal year. Fifteen per cent Import duty on wheat gluten used in food preparation of domestic poultry industry instead of existing 25 per cent was proposed to reduce the production cost in the livestock industry.