Home ›› 12 Apr 2023 ›› Front
At a time when the nation is already burdened by soaring inflation as well as high energy costs and commodity prices, the government’s latest move to hike fertiliser prices in hot weather conditions will push cultivation costs up, which may increase food prices and mount inflationary pressure further.
Farmers said the production cost of per kg cereal and vegetable crops will increase by at least Tk 1-2.
In a circular of the agriculture ministry on Monday, the government increased the prices of four widely used chemical fertilisers by Tk 5 per kg.
From now on, per kg urea and triple superphosphate (TSP) will be sold at Tk 27 while di-ammonium phosphate (DAP) and muriate of potash (MOP) will be sold at Tk 21 and Tk 20 respectively.
At the dealer level, per kg urea and TSP will be sold at Tk 25 while DAP and MOP will be sold at Tk 19 and Tk 18 respectively.
In the current fiscal year, the Ministry of Agriculture set the target to use 2.6 million tonnes of urea, 1.65 million tonnes of DAP, 0.75 million tonnes of MOP, 0.7 million tonnes of TSP, 0.55 million tonnes of gypsum, 0.141 million tonnes of zinc sulphate, and 0.178 million tonnes of other fertilisers.
In FY23, the total usage target of urea, TSP, MOP, and DAP is 57 lakh tonnes. Thus, Tk 5 increase in each kg fertiliser price will cost farmers an additional Tk 2,850 crore from the next fiscal year, provided the annual target remains the same.
Agriculture Minister Abdur Razzaque said on Tuesday, “We tried our best not to increase the prices as farmers will not be able to use the required amount of fertilisers. But the Tk 5 increase will not largely impact farmers.”
He said fertiliser prices had gone up in the international market. “In FY21, we spent Tk 28,000 crore on fertiliser subsidies. The FY23 project subsidy is Tk 43,000 crore.”
The minister said it is not that the government cannot bear this huge burden of subsidy but of course it is hard for them. “Considering the overall economy, the government decided to increase prices.”
Fertiliser price hikes will increase cultivation costs, said farmers. On top of that, the country is experiencing a mild to moderate heat wave, which created the demand for extra irrigation in paddy, vegetable, and mango farming along with other crops.
The current heat wave starting on April 10 may continue for the next eight days and there is less possibility of rain across the country, according to Bangladesh Meteorological Department. To tackle the heat wave, the DAE gave farmers a set of directives on irrigation.
The directives include keeping two to three inches of water level in the paddy field until the cereal grows strong, watering the vegetable field two to three times during the next one week, and ensuring adequate irrigation in the root of mango trees and watering the branches, if needed.
At present, Boro paddy has been cultivated on 49.77 lakh hectares of land and has not become mature yet. Besides, mango has been farmed in around two lakh hectares while summer vegetables are still in the field.
Currently, diesel and kerosene are sold at Tk 109 per litre, petrol at Tk 125 per litre, and octane at Tk 130 per litre.
Earlier on August 5 last year, at the consumer level, the retail prices of diesel and kerosene within 40km of fuel depots were Tk 114 per litre while octane and petrol prices were Tk 135 and Tk 130 respectively, according to the Energy Division.
In November 2021, the government increased the prices of diesel and kerosene by Tk 15 a litre. Also, the prices of diesel and kerosene were increased to Tk 80 a litre from Tk 65.
What farmers say
Abdul Hadi, a farmer in Badarganj of Rangpur, told The Business Post the combined need of the four chemical fertilisers is around 200 kg in each bigha of land for rice cultivation.
“Thus, rice cultivation will include an additional fertiliser cost of Tk 1,000 per bigha. Moreover, additional irrigation costs due to the heat wave along with other costs will impose the burden of another Tk 1,000 per bigha. Thus, each bigha rice production cost will increase by Tk 2,000,” he explained.
He said one bigha of land can produce 28-30 maunds of rice.
“Around 150 kg fertiliser is needed to cultivate corn in each bigha. That is why corn production cost per bigha will increase by around Tk 700-800,” Hadi also said.
He added that other costs, including that of seeds, go up when fertiliser prices increase, as has happened in the past.
Farhad Hossain, a farmer and general secretary of the Rice Mill Owners Association of Naogaon, said there is no doubt that the increased fertiliser prices will cause production costs to rise.
Production cost may go up by Tk 1-2 per kg for rice, corn, mustard, wheat, and some vegetables, he said.
“Though production costs are increasing gradually, consumers have a limit on how much they will spend on food. In this situation, farmers are bearing the brunt,” he added.
Inflationary pressure may mount
Planning Minister MA Mannan on Tuesday said the fertiliser price rise may push up the country’s overall inflation rate.
“I can say the increased prices of fertilisers will have some impacts on the inflation rate. If production costs increase, inflation may go up as well,” he told journalists.
Shamsul, however, said inflation will not go up if overall production increases.
The general point-to-point inflation rate increased by 0.55 percentage point to 9.33 per cent in March this year compared to the previous month. The rate was the highest in seven months, according to Bangladesh Bureau of Statistics.
Agro economist Jahangir Alam Khan told The Business Post the decision to hike fertiliser prices clearly contradicts the government’s initiatives to bring more land under cultivation as well as increase domestic production.
“Earlier, the prices of electricity and oil were increased in phases. The combined hike increased production costs at the farmer level, which will finally put pressure on consumers,” he said.
“Agriculture subsidy should be increased in the upcoming national budget. Farmers must get cash incentives to recover the increasing production costs.”
He suggested reducing the price gap between the farmer and the consumer level by eliminating the excessive cost at the middlemen level.
Jahangir also said the government should change its tendency to import fertilisers and focus on domestic production instead.
If prices reduce in the international market, there should be a reflection of that in the local market as well, he added.
