Tuesday, 28 March, 2023

Fertilizer Import and Challenge for Food Security in Bangladesh

Sultan Mahmud

Fertilizer Import and Challenge for Food Security in Bangladesh

The Ukraine-Russia war poses new challenges to the global food supply.  Every day, more than 82 million people in the world go to bed with an empty stomach. The economy of Bangladesh also has to face many challenges such as fuel prices hiked up to 51.7%, regular load shedding, excessive pressure on imports, devaluation of the Bangladeshi Taka (BDT) against the US Dollar, increasing the US dollar price in the informal market, decreasing remittance inflow, and stagflation, etc. at a time. Ensuring food security for all is now one of the major concerns for sound and sustainable economic development of the country during this situation.

There are three main challenges behind the augmentation of food insecurity in Bangladesh: (i) decreasing food grain production; (ii) decreasing purchasing power of the majority of people; and (iii) prevailing high-income inequality in the economy.

According to the USDA 2022, total rice production in Bangladesh was about 35.85 million metric tons (Boro 19. 35 million, Aus 2.7 million, and Aman 13.8 million) and total wheat production was 1.1 million metric tons in Fiscal Year (FY) 2021-2022. Total rice production is expected to increase by 2% to 36.32 million metric tons (Boro 19.7 million, Aus 2.72 million, and Aman 13.9 million) and total wheat production is also expected to increase by 2.7% to 1.13 million metric tons in FY 2022-2023. The demand for wheat and wheat flour is increasing in Bangladesh demanded by restaurants, bakery industries, and even households. To meet up the growing demands, the country is also expected to import 2 million metric tons of rice, 7.5 million metric tons of wheat, and 2.3 million metric tons of corn in FY 2022-2023. To stabilize the rice price in the market, the government of Bangladesh has already permitted 428 business firms to import 1.72 million metric tons of rice at a lower duty rate.

Modern agriculture cannot be imagined without using chemical fertilizers. According to Bangladesh Fertilizer Association (BFA) and USDA 2022, the annual demand of Bangladesh for chemical fertilizers is about 6 million metric tons, of which about 80% are to be imported. Bangladesh government imports four major chemical fertilizers Urea, Diammonium Phosphate (DAP), Triple Super Phosphate (TSP), and Muriate of Potash (MOP).

The Ukraine-Russia war has added new concerns for underdeveloped and developing countries like Bangladesh for importing chemical fertilizers, whose prices had been doubled on the international market during the two-year-old Covid-19 pandemic.

Russia is also one of the key suppliers of fertilizer to Bangladesh. Bangladesh needs 0.75 million metric tons of Muriate of Potash (MOP) fertilizer every year. The country imports 40% or 0.30 metric tons of MOP fertilizer from Russia and 20% or 0.15 million metric tons from Canada. Besides MOP, TSP and DAP fertilizers are also imported from Russia. If the Russia-Ukraine war continues, it can create a MOP supply cut causing higher domestic prices of chemical fertilizer arising in the upcoming Boro/Rabi season in Bangladesh. Due to sanctions and payment-related complications, Bangladesh can hardly import chemical fertilizers from Russia.

According to Bangladesh Fertilizer Association 2022, Bangladesh requires 2.65 million metric tons of Urea, 0.75 million metric tons of TSP, and 1.6 million metric tons of DAP fertilizer every year. The country only produces 1 million metric tons of Urea and only 0.1 million metric tons of TSP every year. The rest of the demands for Urea are met by importing from UAE, Saudi Arabia, and Qatar and TSP from Morocco, and Tunisia. 

Jamuna Fertilizer Factory, the only Granular Urea producer factory in the country and Chittagong Urea Fertilizer Limited (CUFL) stopped production due to gas shortage. The production capacities of those factories are 1700 metric tons of Urea per day respectively. It is high time to rethink ensuring the smooth supply of chemical fertilizer finding alternative sources of necessary sufficient fertilizers.

A large portion of cultivable lands in Bangladesh remains uncultivated both in Kharif-2 (HYV Aman), and Robi (HYV Boro) seasons in Bangladesh every year due to lack of having tenant farmers in the respective rural areas. The owners of these uncultivated lands are also indifferent to cultivating agriculture lands due to increasing the cost of production (i.e., increasing the cost of ploughing, irrigation, HYV seeds, pesticides, wage of agricultural labor, harvesting, etc.) and making less profit not to get proper price of their agricultural produces, etc.  Chemical fertilizer is directly linked with food security of a developing country. If the fertilizer price increases in the coming Robi (HYV Boro) seasons, it will make a good number of farmers indifferent to cultivating HYV Boro that could have a negative impact on ensuring the food security in Bangladesh.

Due to Covid-19 pandemic, most of the people of Bangladesh, especially who are living the upper poverty line and in the lower middle class, have already lost their savings and living on borrowed money. According to FAO 2022, a large number of people in Bangladesh are now living with food insecurity increased by 2.4% reaching to 5.2 crores between 2018 and 2020. As much as 31.9% of the total population in Bangladesh has experienced moderate to severe food insecurity. In 2019, the poverty rate was 20.5% in Bangladesh.

According to Bangladesh Institute of Development Studies (BIDS) and the University of Bath, the poverty rate was 25.87% in 2020 where as per the estimation of the General Economic Division, Ministry of Planning, the country’s poverty rose to 29.5% as of June 2020. Covid-19 also added 18.54% “new poor” from FY 2019-2020 due to stagflation and slower than expected economic recovery (PPRC and BIGD 2022). Before Covid-19, the poverty rate in Bangladesh has decreased by an average of 1.62% every year since FY 2000-2001.

Bangladesh can avoid the interruption of chemical fertilizer supply and the higher domestic prices of required fertilizers in the upcoming Boro/Rabi crop season by signing bilateral or multilateral agreements between countries on importing of chemical fertilizers from Canada, UAE, Saudi Arabia, Qatar, Morocco, and Tunisia. Agriculture is still one of the key driving forces of economic growth and it continues to be one of the most important sectors of the economy of Bangladesh. Even during Covid-19 pandemic, agriculture has played a significant role in ensuring food for all creating employment opportunities through food production, income enhancement, increasing the purchasing power of the majority of people in the country, and meeting up the growing demands for industrial products.

There is no alternative but to intensifying our arduous effort for sustaining economic growth by promoting our agricultural produces. The country needs to assure the smooth supply of chemical fertilizers and electricity for the farmers proving more subsidies to ensure food security, and to help the country towards a resilient recovery.

The writer is a researcher at Economic

Division, Bangladesh Institute of Social Research (BISR) Trust. He can be reached at: [email protected]