Bangladesh is currently providing muriate of potash (MOP) fertiliser to farmers at the rate of Tk 15 per kg, the price of which skyrocketed in the global market after the start of the Russia-Ukraine war. But over the past few months, the price has been gradually declining, thus reducing pressure on government expenses.
The prices of other fertilisers such as urea, TSP and DAP are also falling in the global market. The current downward trend in prices will also reduce subsidy pressure, according to officials of the Ministry of Agriculture.
The price of MOP fertiliser in the international market has come down to Tk 69 per kg over the last six months, from Tk 120 per kg, according to price data approved by the Cabinet Committee on Government Purchase. The prices of other fertilisers have also fallen by a significant margin.
The current buying price of fertiliser is slightly lower than the average buying price for the fiscal year 2021-2022, reports bdnews24.com.
Due to the gradual decline in prices in the international market over the past six months, fertilisers have been procured at lower prices, said Agriculture Secretary Sayedul Islam.
It is a matter of ‘relief’ for everyone that the government has prioritised crop production to ensure food security in the current global situation created by the war, he said.
"Even though the prices of fertiliser went up by a big margin earlier, farmers did not raise an alarm as the government had increased subsidies. Adequate amounts of fertiliser were supplied to farmers in all seasons. The government has arranged for fertiliser for the next Boro season as well.”
As pandemic restrictions began to lift in mid-2021, the prices of many products in the international market, including fertiliser, oil, and gas, started to go up. The Russia-Ukraine war that started in March 2022 also had a direct impact on prices.
While selling fertiliser to farmers, the government used to provide subsidies of Tk 80 billion per year on average, but the amount jumped to Tk 280 billion in the fiscal year 2021-2022.
To reduce the pressure of subsidies, the government increased the retail price of urea fertiliser from Tk 6 to Tk 22 in August. The prices of other fertilisers have remained the same - TSP is selling for Tk 22 per kg, MOP Tk 15 and DAP Tk 16.
The government is currently buying urea at Tk 63 per kg from the international market. For every kg, it is also paying Tk 50 for TSP, Tk 69 for MOP and Tk 71.71 for DAP.
The price of these fertilisers increased continuously in the 2021-22 fiscal year and stood at an average of Tk 96 per kg for urea, TSP at Tk 70, MOP at Tk 54 and DAP at Tk 93.
Sayedul Islam said, "If the current trend of falling prices continues, the subsidy amount will decrease. Last July, the prices of all types of fertilisers skyrocketed. MOP fertiliser had to be bought at Tk 120 per kg at the time. Later, the prices gradually fell by about half. We will definitely see a benefit from it."
Russia is considered the world's largest supplier of scarce MOP fertilisers. This fertiliser is also available in mines in Canada and Belarus. MOP fertiliser is available in some Middle Eastern countries as well but in low quantities.
At the end of last February, the price of MOP fertiliser started to increase after Russia faced Western sanctions due to its war with Ukraine.
At that time, Bangladesh hastily signed a state contract with Canada to purchase 500,000 tonnes of MOP fertiliser per year. As per the agreement, the purchase of the first year’s worth of fertiliser has been completed.
According to the agriculture ministry, Bangladesh requires 6.6 million tonnes of urea and non-urea fertilisers every year.
PRICES FALLING STEADILY
The import cost per kg of urea was Tk 32, TSP Tk 33, MOP Tk 23, and DAP Tk 37 in the fiscal year 2020-21. Based on the expenditure, the government provided subsidies of nearly Tk 80 billion at the end of the year.
In the next fiscal year 2021-22, the government had to spend an additional Tk 200 billion on fertiliser purchases. The total expenditure shot up to nearly Tk 280 billion.
Comparing the average purchase price of the fiscal year 2021-2022 with the latest prices, the current price of urea has decreased by Tk 33, TSP by Tk 20 and DAP by Tk 22 per kg. However, compared to the average price of the last fiscal year, the price of MOP has increased by Tk 15 per kg.
In Wednesday's meeting of the purchase committee, the proposal by the agriculture ministry to buy a total of 100,000 tonnes of MOP fertiliser from Canada was approved, said Syed Mahbub Khan, additional secretary of the Cabinet Division.
During the previous phase, the cost of buying MOP fertiliser was $679.65 per tonne, but this time it has decreased to $655.30, Syed said.