Ten days before the Ukraine-Russia started on Feb 24, the Agriculture Minister Dr Muhammad Abdur Razzak had assured the nation that the government would not increase fertilizer prices under any circumstances to maintain the sound growth of crop production. At that time he also said that before taking any decision to review fertilizer prices at the retail level, the government would discuss the matter with experts, civil society, intellectuals, media as well as farmers.
The meaning of this is that the government would continue to give the subsidy to fertilizer so that the country’s agricultural production is not compromised. But the government could not stick to its decision thanks to the panicky situation over the dollar reserves, and rather to the dismay of the farmers, it has increased the price of a kilogram of urea by Tk 6 at the retail level. Before taking this decision, it also did not discuss the matter with the relevant people including the farmers.
For the last 11 years, the price of urea did not see any hike. After the price hike a kilogram of urea will now be at Taka 22 at the retail level. Increase in fertilizer means the more production cost for the farmers and, that in turn, would shoot up locally produced agricultural items including the grains such as rice and wheat, the staple foods of Bangladesh.
Understandably the government has raised urea’s price to meet the condition of the International Monetary Fund (IMF) that has been approached by the government for an economic bailout package of $4.5 billion. The IMF does not give loans to poorer economies without setting conditions. Recently it granted a similar loan to Pakistan only after the government there raised the price of fuel oil that was a heavily subsidized commodity in Pakistan. The IMF or the World Bank or other west-based financial institutions fail to understand the economic dynamics of third world countries. They take interest on the loan on the one hand and set conditions for granting the loan on the other hand. That is why it is always better not to seek these loans.
The government of Bangladesh, because of its mismanagement and indulgence in massive corruption, brought the economy to such a state that it has now stretched hands before the IMF. Beggars can’t be choosers, and the Bangladesh government might have been forced to accept the IMF condition. But the government could have very well cut other subsidies rather than increasing the urea price as poor farmers of the country — they make the majority in the farming community — used to be benefitted by low cost in production.
Yesterday’s newspapers reported that many farmers might feel discouraged to cultivate rice because of the high production cost. This surely does not bode well for the food security of the country.
