Farmers face double whammy as diesel gets dearer after urea

The diesel price hike, following a recent increase in fertiliser prices, has dealt another blow to the agriculture sector as it will further push up production cost, which may also lead to reduced agricultural production as well as increase dependence on imports.

Agricultural economists fear many farmers will not be able to continue production with increased production costs as their capacity is low. This comes at a time of global food shortages engendered by the Russia-Ukraine war.

According to Bangladesh Agricultural Development Corporation (BADC) data, of two crore farmers, about 75% irrigate their land with diesel-powered engines during the five months of the boro season (December-April). Annual consumption of diesel in agriculture is 9.72 lakh tonnes, which is 21.15% of total diesel consumption. In the boro season alone, diesel consumption is nearly 8 lakhtonnes.

Until now yearly diesel cost in the agricultural sector has been Tk8 crore, which will now soar to Tk11.5 crore, a 42.5% increase after the diesel price was hiked by Tk34 per litre.  

The price of urea fertiliser has already increased by Tk6 to Tk22 per kg. Bangladesh Rice Research Institute (BRRI) research says 23kg of urea is used perbighaAman rice cultivation and 30kg perbigha in Boro rice cultivation. In other words, cost per bigha cultivation will increase by 37.5% for urea alone.

Ruhul Amin, a farmer of Badarganjupazila of Rangpur, said, "I cultivate paddy on 3.5 bigha land during the Boro season. All are irrigated by diesel powered engines. Now the cost of irrigation will increase with the already increased cost of fertiliser. With the increased cost, we may have to reduce cultivation."

Agriculture economist Jahangir Alam Khan told The Business Standard that farmers will now have to deal with pressure from two sides.

"Due to low rainfall in the Aman season, many people are irrigating the land by installing irrigation pumps – which is already an added cost. The increase in fuel price will further increase cost. On the other hand, about 75% of land in the Boro season is irrigated with diesel-powered irrigation pumps. The effect of the hiked fuel prices will be massive," he elaborated.

He added it may lead to many shifting away from cultivation.

"If production decreases, dependence on imports will increase. Rice import, which currently stands around 10-15 lakh tonnes, may double," he warned.

He said the price of diesel was increased when the current government came to power in 2009. However, the government gave a cash subsidy of Tk800-900 to save the farmer.

"The government should provide a similar cash assistance to keep farmers in production," recommended Jahangir Alam Khan.

This time also cash assistance is needed to keep farmers in production.

Senior officials of the Ministry of Agriculture said currently there are no discussions about providing subsidies to farmers.

As there are some four months' time before the Boro season begins, no one agreed to make an official statement.

Meanwhile BADC, which provides technical support and management for irrigation pumps, said around 16 lakh irrigation pumps are now used across the country during the Boro season.

Dhirendra Chandra Debnath, member director (Minor Irrigation), BADC, told The Business Standard, "There is no doubt that the production cost will increase due to the fuel price increase. But it is possible to reduce the production cost."

He further elaborated his comments, saying, "Say five pumps are being used in some places, but it is possible to meet demand for water with three pumps. We can make such changes and possibly reduce diesel consumption. Importance should also be given to using water only to the extent needed."

Due to lack of normal rainfall this year, farmers in several districts, including the northern region, are planting Aman by installing irrigation pumps. As a result, the cultivation of Aman did not amount to much, because not all farmers have the ability to meet the extra expenses or are willing to cultivate by installing irrigation pumps.

Earlier this month, when it rained, farmers started planting Aman across the country. However, meteorologists say that the rainfall is likely to decrease after a week. Therefore, there is a strong possibility of irrigation pumps once again being needed for water supply. That will of course mean that production costs will again soar.

According to Bangladesh Bureau of Statistics data, about 1.5 croretonnes of rice were produced during the Aman season, which is close to 2 croretonnes for Boro. Altogether total rice production is about 3. 76 croretonnes.

Currently, coarse rice is being sold at Tk50 per kg and premium rice at Tk75-82 per kg. The price of rice will rise further if the cost of production increases and the price of the rice that is currently available will also increase due to the increase in transportation costs, according to traders.