Govt. action on fertiliser shortage: Too little too late

By Chathuri Dissanayake

Steps taken by the Government to address the ongoing fertiliser shortage in the country may be inadequate and arriving too late to yield results, industry experts warned.

Although steps have been taken by the Government to buy all available stocks of fertilisers in the private sector at a price calculated through a price formula, the supply cannot meet the farmers’ demand. The Government last Friday decided to buy 8,000 MT from three private sector fertiliser suppliers - Baurs, CIC and Agstar. The decision has already been approved by the Cabinet, Agriculture Ministry Secretary B. Wijayaratne told the Daily FT. “The private sector was not willing to sell at the stipulated price of Rs. 2,500 as the market price of fertiliser has gone up. So Cabinet has given approval to pay the gap based on the formula,” Wijayaratne said.

The stocks will be deployed to areas where there is a shortage, with the Fertilizer Secretariat which comes under the purview of the Agriculture Ministry responsible for selling the stocks to farmers at Rs. 2,500 a bag. 

However, the country needs 180,000 MT tons of fertiliser for the Maha season to fertilise the 600,000 acres cultivated during this season. 

The Government has for the second time spoken to Pakistan’s Prime Minister Shahid Khaqan Abbasi to obtain a shipment of 75,000 MT of fertiliser. President Maithripala Sirisena on 12 December announced he had made the same request in early December last year with the delivery expected to arrive by 30 December. However, the plan did not materialise, prompting Sirisena to once again issue a call.

The shortage in fertiliser was caused due to a host of reasons including delays and a cancellation in the fertiliser tender process and the private sector temporarily pulling out of the market due to world market prices. Price fluctuations in the world market prevented local suppliers from importing the stocks needed to meet demand as the Government-imposed Maximum Retail Price of Rs. 2,500 would have reduced the profits. 

The Ministry earlier awarded and then withdrew a tender to supply 72,000 MT of urea (prilled) from JAT Holdings Ltd. due to several irregularities and quality failures of the stocks. The cancellation of the tender has also contributed to the current shortage. Later the ministry called for tenders for the second time, but it is not clear where the process is at present.

The first tender notice by the Ministry to supply 72,000 MT of urea (prilled), 30,000 MT of MOP and 30,000 MT of TSP under DA terms drew the response of only five bidders for urea, one bid for TSP and no bid for MOP. Following evaluations by the Technical Evaluation Committee, bidders who did not present prices under DA terms and bidders with other major price variations were rejected on the preliminary evaluations with only JAT Holdings qualifying for the evaluation. Later the tender awarded to JAT Holdings was cancelled due to bidding irregularities. The Ministry has also re-advertised a second call for bids to supply the same hoping to attract interested parties.

“The President’s Secretary has confirmed that the delivery will take place,” Wijayaratne assured.

However, industry experts are sceptical about the practicality of the plan, as the standard delivery time is six to eight weeks.

“I am afraid the time window is now closing. The fertiliser may not arrive in the country in time,” said one industry expert who spoke to the Daily FT on the condition of anonymity.

All Ceylon Farmers’ Association convener Namal Karunaratne also claimed that the fertiliser would arrive too late in the season.

“The paddy should have been fertilised now. Farmers now complain that the paddy is all yellow in colour due to a lack of nitrogen. Urea fertiliser is the main source of nitrogen for paddy,” he said.

Karunaratne also complained that the fertiliser subsidy has not been released to the farmer account to date, while adding that the fertiliser shortage had made matters worse.

Sirisena on Saturday announced that instructions have been issued to the Treasury to release Rs. 2.5 billion to supply the agricultural community with proper fertiliser.

Speaking at a political rally over the weekend, the President said the instructions were issued immediately after receiving information that farmers had still not received a fertiliser subsidy.

The funds will be deposited in the accounts of local farmers. Those who are yet to receive funds have been requested to contact the Ministry of Finance, the President’s Media Division said.