Amid Ukraine war, Bangladesh looks to alternatives to Russia for fertilisers

The COVID-19 pandemic had already pushed up the prices of chemical fertilisers globally. The Russia-Ukraine war has created further trouble. Desperate to keep food supply normal, the Bangladesh government is now more worried about finding an alternative to Russia as a major source of fertilisers than the prices.

After the war broke, Russia, the major fertiliser exporter holding 15 percent of the market, faced Western sanctions which disrupted the supply chain. It has already impacted the fertiliser import of Bangladesh.

Bangladesh has a demand for 750,000 tonnes of murate of potash or MOP fertiliser each year and Russia supplies 300,000 tonnes of it. Also, Bangladesh imports TSP and DAP fertilisers from Russia.

Although the supply of urea, the most used fertiliser in Bangladesh, has not been hampered yet, policymakers are worrying about the supply of other three major fertilisers-TSP, MOP and DAP. This is because the war had upended the supply chain.

Agriculture ministry officials said they would import fertilisers from Canada to meet the demand next year. They are working to procure fertilisers from other sources as well. High prices are still concerning them.

The government increased the subsidy for fertiliser once the price skyrocketed in the global market, but has no plan to increase the domestic prices as of now, they said.

Even if the prices increase multiple times globally, the government plans to distribute fertilisers at the same cost in the next fiscal year, said Agriculture Minister Abdur Razzaque.

”We’re facing some trouble in fertiliser management due to the price hike on the international market, but we’re working to redesign the supply system without changing the price,” he said.

WILL CANADA BECOME AN ALTERNATIVE TO RUSSIA?

Bangladesh chose Canada as an alternative to Russia for importing fertilisers just before the Ukraine war broke out, said Bolai Krishna Hazra, additional secretary at Fertiliser Management and Equipment Department in the agriculture ministry.  Earlier, the authorities used to import 300,000 tonnes of MOP fertiliser from Russia and 150,000 tonnes from Canada, he said.

Bangladesh reached an agreement with Canada to have it as an alternative source of fertiliser and the Canadian ambassador assured Bangladesh of exporting fertiliser, he said. Bangladesh will import 550,000 tonnes of MOP fertiliser from Canada next year.

They have enough fertiliser stored for the current fiscal and there is no disruption in demand and supply as of now, officials said.

The country may need an estimated 5.7 million tonnes of chemical fertilisers, includes 2.6 million tonnes of urea, 750,000 tonnes of TSP, 750,000 tonnes of MOP and 1.6 million DAP fertiliser in the fiscal year of 2022-2023. The authorities have started to collect it.

Out of these fertilisers, 1 million tonnes of urea are expected to come from six factories of Bangladesh Chemical Industries Corporation (BCIC) under the industries ministry.

The rest are usually imported from Russia, Saudi Arabia, China, Morocco, Canada, Qatar, United Arab Emirates, Tunisia and some other countries.

While Canada is becoming the alternative source for importing TSP, the authorities are also working to import other fertilisers from other exporter countries, officials said.

CURRENT SUPPLY

According to Bangladesh Agriculture Development Corporation (BADC), government warehouses and supply transports have 236,557 tonnes of TSP, 262,927 tonnes of MOP and 368,853 tonnes of DAP in them. In total, 868,338 tonnes of non-urea fertilisers are available.  BCIC warehouses have 600,000 tonnes of urea fertiliser stored in them.

BADC has distributed more than 1.5 million tonnes of non-urea fertiliser as of May in the current fiscal. They will distribute 24,000 tonnes of fertilisers in May. The amount was 25,797 tonnes in April.

In the last fiscal year of 2020-2021, BADC distributed 55,261 tonnes of non-urea fertiliser in April and 49,987 tonnes of all types of fertilisers in May.

DEMAND PER SEASON

According to the agriculture ministry, 40 percent of the annual fertiliser demand is needed in Robi season, or from autumn to spring, and the rest for Kharip 1 season from summer to monsoon, and Kharip 2 season from monsoon to autumn.

Usually, non-urea fertilisers like TSP, DAP and MOP are used in the dry season to prepare the farming fields, while urea fertiliser is used to boost crop production.

The authorities allocate the fertilisers in a month based on the annual demand. The distribution peaks from December to March when the farmers get around 2.3 million tonnes of fertiliser, Bolai Krishna said. On an average, 427,000 tonnes of fertilisers are distributed every month for the rest of the year.

Enlisted dealers collect their allocated amount of fertiliser from the designated places and they can apply for additional supply, said Reaz Uddin Ahmed, executive secretary of Bangladesh Fertiliser Association (BFA).  The ministry then allocates the extra amount of fertilisers as recommended by the deputy commissioner's office. The process I quite fast, Reaz said.

Apart from the four major fertilisers available under government management, some other types of fertiliser are imported and marketed by the private sector.

Those fertilisers are used to add nutritional values to the crops and boost the yields as recommended by the agriculture officers.

Fertilisers imported by the private sector include SOP, gypsum, zinc sulphate, mono-hydrate, zinc sulphate hepta-hydrate, boric acid, solubor, magnesium sulphate and ammonium sulphate.

The private sector imports 500,000 tonnes of nutritional fertilisers a year, said the BFA executive secretary.

As the fertiliser prices shot up in the global market, farmers may have to pay more for those fertilisers this year.

Fertiliser crisis is never caused by hoarding, said Additional Secretary Bolai Krishna. Sometimes transportation delays cause trouble and lead to a temporary crisis in some parts of the country, Bolai Krishna said.

Sometimes farmers in an area suddenly buy excess fertilisers, creating a crisis there. But there is a slim chance to have a long term fertiliser crisis as the government allocates it monthly. 

WILL SUBSIDY CONTINUE?

The government has been providing subsidies every year for the four chemical fertilisers to ensure food security and boost agricultural production in the country. That is why the fertiliser prices remained unchanged for the past decade in the local market, despite major changes in price in the international market.

As the subsidy amount has increased significantly in the current fiscal, many people worry that the government may scrap it and prices will go up. The government, however, brushed aside the possibility of reducing subsidies.  Both Prime Minister Sheikh Hasina and the agriculture minister assured that the government has no plan to reduce it.

Currently, the government provides urea fertiliser at Tk 16 per kg, TSP at Tk 22 per kg, MOP at Tk 15 per kg and DAP at Tk 16 per kg – all with subsidies.

According to the agriculture ministry, the government spent Tk 77.17 billion on fertiliser subsidies in 2020-21 fiscal. The figure was Tk 68.75 billion in 2019-20 and Tk 76.83 billion in 2018-19.

After 2008-09 fiscal, the government spent Tk 50 billion to Tk 120 billion annually on fertilisers. The lowest spending was Tk 34.7 billion in 2016-17 and the highest Tk 119.93 billion in 2012-13.

The sudden price hike on the global market made the government to increase fertiliser subsidies fourfold in the current fiscal. The import cost was Tk 32 per kg for urea fertiliser, Tk 33 for TSP, Tk 23 per Kg for MOP and Tk 37 per kg for DAP, the agriculture minister recently said.

The cost stands at Tk 96 per kg for urea, Tk 70 for TSP, Tk 54 for MOP and Tk 93 for DMP in the current fiscal of 2021-22.

To sell fertiliser to the farmers at the previous rate, the government had to provide subsidies of Tk 82 per kg for urea, Tk 50 for TSP, Tk 41 for MOP and Tk 79 for DAP. The annual expenditure for fertiliser subsidies, therefore, may reach Tk 300 billion.

[Written in English by Sabrina Karim Murshed, edited by Osham-ul-Sufian Talukder]