Home ›› 07 Aug 2022 ›› Front
Farmers in Bangladesh are about to face a major crisis due to the latest hike in fuel prices, which has followed the rise in urea fertiliser prices.
Costs are set to rise due to the fuel price hike as fuel-run irrigation pumps will consume additional money and farmers will have to pay more to transport agricultural products. Along with these two, the costs of cultivation, distribution and marketing will also go up, say experts.
According to sources, all these costs will severely impact the country’s agriculture sector. Farmers and consumers both will have to suffer as commodity prices go up.
Experts and officials concerned have said that farmers will have to pay an additional Tk 3,300 crore to buy diesel for agriculture usage following the diesel price hike that came into effect on Saturday.
The government on Friday night announced the new tariffs amid the volatility in the global market.
Diesel and kerosene retail prices have been fixed at Tk 114 per litre while octane will now cost Tk 135 per litre and petrol Tk 130.
For diesel, its price has gone up by Tk 34 per litter — a 42.5 per cent hike from the previous Tk 80.
The fuel price hike comes at a time when people, particularly from the lower- and middle-income groups, are already struggling with the skyrocketing commodity prices.
The move came just four days after the government hiked urea fertiliser prices by Tk 6 per kg in order to keep urea use at a rational level and due to the increased rate in the global market.
The new prices, which came into effect last Monday, will be Tk 20 per kg at the dealer level and Tk 22 per kg for farmers, which was Tk 16 till July 31.
According to the Agriculture Ministry, the country’s annual demand for urea is 26 lakh tonnes. Experts have said that farmers will have to pay an additional Tk 1,600 crore to buy urea due to the hike.
Irrigation concerns
According to Bangladesh Petroleum Corporation (BPC), in the 2020-21 financial year, the agriculture sector consumed 9.75 lakh tonnes of diesel — which is 15.49 per cent of the country’s total consumption.
Farmers had to pay around Tk 7,805 crore in FY2020-21 for buying diesel. Now, the farmers will have to pay around TK 11,122 crore in FY2022-23, which is Tk 3,317 crore more than last fiscal year’s cost.
According to the Bangladesh Agricultural Development Corporation (BADC) and the Department of Agricultural Extension (DAE), for irrigation, there are 1.63 million shallow machines across the country. Of them, 1.26 million or 70 per cent run on diesel and the rest on electricity.
“Farmers themselves manage the irrigation pumps. They buy diesel from the market at market price,” said Md Jafar Ullah, the chief engineer (minor irrigation) at BADC, which coordinates, monitors and regulates agricultural irrigation.
“The government must take steps to minimize the costs farmers are set to bear,” he added.
Around 1.6 crore farmers are directly involved in the agriculture sector, cultivating paddy, vegetables and cash crops. Currently, most of the crops, including Amon paddy, need irrigation.
Transport issues
“This massive fuel price hike has come as a shock. This is unprecedented. It will impact agriculture in all aspects,” former DAE director general Hamidur Rahman told The Business Post.
“Not only irrigation, but transportation cost will also increase along with the usage cost of tractors and agro-machineries that run on diesel. All these costs combined will lead to the commodity price hikes,” he said.
Agriculture policies, mechanisation initiatives, and all the other steps were taken to reduce production costs. But now the additional cost because of the diesel price hike will badly impact farmers and consumers both, Hamidur added.
“For the sake of farmers and to keep commodity prices under control, the government should bear the additional fuel cost in the agriculture sector. We hope the government will do something about this,” he concluded.
According to BPC, the transport sector guzzles 62 per cent of the total amount of diesel — 45-50 lakh tonnes — the country consumes annually.
Impact of sustainability
Businesses are also concerned about sustainability following the diesel price hike while the agro-food processing industry has already started adjusting the prices of their products — locally produced and imported both.
“Irrigation, transportation, distribution and generator in factories — the costs will increase in every step. The import cost is already high due to the dollar price hike. Now the commodity prices will increase,” FH Ansarey, president of ACI Agribusinesses, told The Business Post.
He said they were now busy with calculating the impacts of the fuel price hike and working on re-fixing the prices of their products. “We increased the prices of our products in July. Now we are forced to increase the prices again.”
“As the major businesses play a vital role in agriculture and food security, we need to keep the businesses sustainable. The fuel price hike will affect the sustainability to some extent,” he added.
However, none of the people this correspondent contacted could immediately say how much the commodity prices will increase.
According to both Ansarey and Hamidur, impact calculations are underway and an estimate will be available after taking into account all the increased costs in each step from production to consumption.
