Fertiliser prices revised upward

The government Tuesday raised prices of four key fertilisers by Tk 5.0 a kg or 27 per cent on average, citing hike in global prices.

The ‘adjustment’ took place at a time when the global prices of the farm input have shown a notable plunge—54 per cent (for urea) to 19 per cent (for MOP), according to sources.  

Experts say—and a minister agrees, too—the rise in rates of the essential inorganic nutrients could result in a rise in food-production cost as well as could intensify the inflationary pressure when millions of commoners already are paying through their nose for a record surge in food and other living costs.

Agriculture ministry, in response to a request of the Ministry of Finance, hiked the prices of Urea, DAP, TSP and MOP on April 10 by a notification that called it ‘adjustment with global price hike’.

Urea’s new retail price for farmers has been fixed at Tk 27, DAP Tk 21, TSP Tk 27 and MOP Tk 20 per kilogram.

It happens to be a second adjustment of fertiliser prices by the government after August 2022 when price of urea was raised by 37.5 per cent to Tk 22 a kg.

However, an agriculture ministry press release claims the government provided Tk 280 billion as farm subsidy last financial year amid rocketing prices of the products.

The release also claims that this FY a total of Tk 460 billion might be needed for the agricultural subsidy—meant for cushioning the impact of agflation or a general increase in prices of agricultural produce.

It also says Tk 190 billion has so far been spent for the purpose already.

The agriculture ministry says, “Despite raising the price by Tk 5.0, the government will have to give subsidy of Tk 21 a kg on urea, Tk 49 on DAP, Tk 23 on TSP and Tk 40 a kg on MOP.”

Meanwhile, the ministry has set a possible requirement for 6.8 million tonnes of fertiliser for the next financial year (FY’24)

However, according to the agriculture ministry, the country has now a stock of 0.4 million tonnes of urea, 0.20 million tonnes of TSP, 0.25 million tonnes of DAP and 0.225 million tonnes of MOP.

Asked, Agriculture Minister Dr Muhammad Razzaque told newsmen that his ministry reviewed the fertiliser price as per the urgency of the finance ministry to adjust the price with the surge in global prices.

Planning Minister Abdul Mannan agrees that the hike in fertiliser prices would raise inflation further.

“A hike in fertiliser price definitely could cause surge in output costs, but we can’t say what would be the intensity of the hike,” he says about the domino effect on production and consumption for farm products.        

Consumers Association of Bangladesh (CAB) vice-president SM Nazer Hossain noted that over 17 categories of essentials and services showed rocketing hike in costs in the 2022 calendar year compared to that in 2021.

He said apart from the European war and appreciation of the US dollar, hike in diesel and urea-fertiliser prices put notable impact on commodity market in 2022.

“The condition might worsen further this year for hiking the fertiliser price.”

Farm-economist Prof Gazi M Jalil says the farmers will have to spend additional Tk 34 billion on fertilisers following the latest hike.

A farmer might have to pay Tk 500-550 additional for fertiliser purpose at per bigha or 33 decimals of land.

“Production costs of rice, wheat, maize, vegetables, fruits and other cash crops would increase notably for the hike,” he says.

He also pointed out that the government has been reviewing the price at a time when the global prices of the input are declining.

According to the global commodity webportal ‘IndexMundi’, prices of urea declined 54 per cent, DAP by 20, MOP by 19 and TSP by 24 per cent in last six months across the globe.

Urea traded at US $ 313 a tonne on March 31, 2023, down from $678 on September 30, 2022.  

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