The New Nation - Internet Edition

THE doubling of the price of urea and muriate of potash (MoP) fertilisers a day after the presentation of the budget, cannot but create worry about its impact on farm productivity. Straightaway the farmers will have to buy the basic agricultural input at higher price that would raise their cost of production. This price hike is not an incentive for the farmers to produce more. Of course, it may not come as a disincentive if the government now also decides to pay subsidies to the farmers.

For the Boro paddy season the irrigation subsidy was paid after harvesting to farmers and that too not in the pledged amounts. If this manner of subsidy giving for fertilisers is repeated during the cultivation of Aman rice, then the consequences of it could be very undesirable. Many farmers may not be able to absorb the higher production costs all by themselves and would consider cultivation at a reduced level. Those who would be cultivating after absorbing the higher costs of fertilisers, would be selling their produce at much higher prices to compensate for the higher production costs.

Both underproduction of foodgrains and their high prices are undesirable for obvious reasons. Thus, government should tell farmers how it would help them offset the effects of the rise in prices of fertilisers. The decision of price hike of fertiliser was taken to deter such smuggling. But the smugglers will retain the incentive to smuggle out fertilisers to neighbouring countries where their prices are still much higher even after their upward adjustments in Bangladesh. This consideration, however, would be of little value to farmers who would have to pay more for fertilisers and would require support to keep productions costs at affordable levels.