Bangladesh is striving hard to secure urea imports after an international tender floated last month failed to attract any bidders. The urgency follows the shutdown of five of the country’s six urea factories because of gas supply crunch after the US-Israel war on Iran. The conflict has reverberated across the Middle East, a crucial hub for fertilizer exports and for natural gas.
Agriculture is the lifeline of our economy. Of the agricultural income, crop agriculture alone accounts for above 55 percent. There is no alternative to boosting farm yield as the country is gradually losing farmland to non-farm use. If diminishing return from farmland follows the scanty use of fertilisers, the food security may be in peril.
Bangladesh, according to a report, may harvest a lower quantity of rice from the current Boro season as farmers faced difficulties in ensuring adequate irrigation and fertilizer application, due to shortages of key production inputs. The reduction in Boro rice yield is attributed to disruption in irrigation and fertilizer application resulting from fuel and fertilizer shortages due to the impact of war. Farmers in some areas purchased urea, potash, and phosphate fertilisers at prices above the government fixed rates and applied those in growing potatoes. This led to a shortage of fertilisers for Boro rice cultivation.
Now the Aman paddy, the country’s second largest rice crop, is due for planting and it needs huge quantity of fertilisers including urea. Dhaka is, therefore, approaching producers such as Russia, Brunei, as well as more distant and less conventional suppliers, including Latvia and Ukraine. Since the US-Israel war on Iran, the Strait of Hormuz- a key artery for global fertilizer trade remains closed. It disrupts flows, accounting for roughly 30 percent of global fertilizer shipments. The Government has also asked Saudi Arabia, a regular supplier, to consider alternative shipping routes. Bangladesh is looking to get fertilisers from other countries which can ship using routes bypassing the Strait of Hormuz. Moscow is expected to submit a formal proposal soon.
Bangladesh needs more than 26 lakh tonnes of urea every year. About three-quarters of demand is met through imports, as local plants operate below capacity when gas is diverted to other sectors. Saudi Arabia, United Arab Emirates and Qatar are Bangladesh’s major suppliers, providing nearly 10 lakh tonnes annually. Since the war broke out, main producers in Qatar and Saudi Arabia declared force
majeure and temporarily stopped production. Due to war the cost of fertilizer and the natural gas used to produce it has also surged. The higher prices will swell the subsidy bill, as the government provides urea and other key fertilisers such as DAP and TSP to farmers to ensure food production.
However, the government should make all possible efforts to overcome the crisis and restart the factories. If higher fertiliser costs persist, rice producing areas could face both rising input costs and less favourable growing conditions at the same time.
