Let's not forget fertiliser crisis

THE advisory committee on purchase recently approved purchase of a huge amount of urea fertiliser (3.75 lakh tonnes) at a cost of Tk. 10,640 million, said to be the highest quantity approved at a single stroke, on November 8. The chairman of the committee Finance Adviser Mirza Azizul Islam said: "Price does not matter here; the government is very keen on buying fertiliser as it wants to have urea for the upcoming boro season.
The finance advisor said that the urea stock in government godowns was at least 100,000 tons more than what it was during the same time last year. He regretted the existence of the artificial fertiliser crisis the farmers were facing.
Reports available from different sources suggest that about 14 lakh tons of urea will be required to meet the demands in the coming boro season, whereas the government has around 4.2 lakh tons (approx.) in stock at present.
Another news item said: "Farmers failing to get fertiliser blocked the Dhaka Aricha Road for an hour and a half yesterday at Uthuli bus stand in Shibalaya Upazila in Manikgonj and assaulted the UNO twice. They also confined the UNO and a fertiliser dealer to a shop at the bus stand."
Newspaper reports confirm that similar incidents have been taking place almost daily at different places of the country since the beginning of October, after the flood water receded and the affected farmers started/restarted crop production on their flood damaged crop fields.
A Bengali daily states that in spite of sufficient stock the crisis in fertiliser availability is increasing in different areas of the country due to the faulty distribution system. It further states that the Ministry of Agriculture and the Ministry of Industries set up "monitoring cells" in January for ensuring smooth supply and distribution of fertiliser, but none of these "cells" had any practical operation or performance during the last 9/10 months.
Both the major political parties -- BNP and Awami League -- expressed serious concern at the present, and perennial, fertiliser crisis all over the country and urged the government to take immediate necessary action to address this crisis.
Some two weeks back, the council of advisers discussed the exorbitant prices of daily essentials and the fertiliser crisis issues at length and said that the advisers would visit the rural areas to see the scenario regarding price hike of daily necessities and non-availability of fertiliser at farmer level.
Some of the advisers found that the prices of daily necessities like rice, cereals, edible oils, spices etc. have been unstable for the last few months and the price trend is on the higher side. And the fertilizer crisis is more acute in almost all the places. The slip system, UNO/UAO supervision-related control on fertiliser sale could not help ease the fertiliser crisis.
In the meantime, the government has spotted 26 troubled points in 18 districts where distribution problem is barring farmers from getting fertiliser. "We've identified some problems at the distribution end and asked authorities concerned to address these," Agriculture Adviser CS Karim told reporters after the monthly meeting of the "three member advisory council" on fertiliser management.
He, however, said that there was no problem in fertiliser stock at the moment. "We've more in stock than the peak season demands. There is no crisis. The imported fertiliser as planned would be kept at Ghorasal Urea fertiliser factory, where production is suspended now," he added.
In an article published in the Bengali daily Jugantor (November 6) I have tried to bring to the notice of the government that about one fourth of the fertiliser (mainly urea), produced in the country and imported, is smuggled out of the country every year. And if this alleged smuggling is not effectively stopped by the concerned law and order agencies like BDR, Coast Guard, police etc., the fertiliser crisis in Bangladesh will continue to gain momentum in the coming days, it is apprehended.

Bangladesh and fertiliser
For last few months the fertiliser availability crisis has deepening. There is a danger, with the crisis so near, that there may be more costly and non-productive action taken by the government, based on various assumptions rather than facts, which may be more serious and ineffective as well.

Background discussions
As fertiliser use began to increase significantly after independence of the country, the heavily subsidised price created a serious budgetary problem for the government during the last few years. To overcome this situation and create an operational free market mechanism, the deregulation of fertiliser prices was introduced and subsidy was gradually phased out. BADC, which was the sole purchaser of urea and TSP from BCIC factories, was also phased out through competition with private sector.
Because of some inherent limitations, BADC could not compete with the private sector, both in terms of price and of availability at retail level. The transportation cost of fertiliser from BCIC factories to BADC godowns was about Tk. 240 crores a year from the government exchequer. The Ministry of Agriculture started deregulation of procurement of fertiliser from BCIC factories by BADC from March 9, 1989, and within the next three months deregulation in respect of procurement of fertiliser from all the BCIC factories was implemented, thus creating facilities for procurement/purchase of urea almost freely from the factories by hundreds of private dealers, and for delivering fertiliser to the farmers in the nooks and corners of the country on demand basis, constantly and instantly.
At that time, the International Fertiliser Development Centre (IFDC) assisted the MOA as adviser in this respect for years under the leadership of Mr. Kenneth L Moots (COP).
After the withdrawal of subsidy in 1992, the retail prices at the farm level reflected the import price plus the other incidental costs and profit. With the devaluation of the Taka, the import prices of fertiliser increased substantially.
As a result, the farm level prices also increased proportionately. On top of that, the international prices of fertilisers also increased considerably. Considering the situation, the government reintroduced subsidy on the imported fertiliser products in order to reduce farm level price for the benefit of the farmers. But the mechanism through which the subsidy was administered did not work smoothly. As a result, the intention of the government to ease the burden of high price on he farmers seems to have been largely frustrated.
Several studies indicate that though fertiliser availability has improved in equitable and timely basis among farmers of all sizes under the existing system, the peak season demand in many of the remote and non-remote areas could not be met.

Fertiliser crisis 2007 -- first phase
Out of a total requirement of urea of 2 to 2.5 million tones, the consumption in February and March was over 1 to 1.2 million tons (about 50%), 90% of which was used for top dressing of rice. HYV boro (BRRI, IRRI and hybrid varieties) production is not possible without urea fertilisation since these varieties consume greater amounts of nitrogen to produce higher yields.
During February and March every year, per day urea requirement in the country is over 16,000 tones. Minimum lead time to reach urea to the farmers' field from the factories and the warehouses is at least 10 days. The optimum demand period is 50 days only.
The urea crisis that developed during the beginning of this year (January to March) was mainly due to short supply from the local factories. Urea factories/warehouses were unable to deliver more than 7,000-8,000 tones per day during February-March period, during which there was short delivery of over 6,000 tons per day. An accumulated short supply situation continued to prevail during the period and culminated during the peak demand period.
Despite having enough stock in the factories/warehouses, BCIC could not deliver as per demand due to inadequate or under-utilised delivery facilities.
Seriously planned proper monitoring of the production, delivery and prices could possibly prevent the crisis situation as in-country stock of urea (January-March) was enough to meet the demand.

Karar Mahmudul Hassan is former Secretary to the Government of Bangladesh.