Production at the state-owned Diammonium Phosphate Fertilizer Company Limited (DAPFCL) at Anowara Upazila in Chattogram
came to a halt on Saturday (April 18) due to an acute shortage of ammonia. Notably, until early last month, ammonia to the DAPFCL was being supplied from the nearby Chittagong Urea Fertilizer Company Limited (CUFL) and the Karnafuli Fertilizer Company Ltd ( KAFCO). But both the factories had to be closed down in early March due to gas crisis. Since that time, the DAP plant was operating with its own stock of ammonia, but that, too, ran out last Saturday leading to its closure.
Obviously, the closure of the fertilizer factories including the Ghorashal Polash, CUFL, KAFCO, Jamuna, Ashuganj, and that of the latest DAPFCL is a not a piece of good news for Bangladesh since DAP is the second most used fertilizer here (approx. at 1.52 million metric tonnes, or MT) after urea (at 2.6 million MT). The country meets three-quarters of its chemical fertilizer requirement (mainly of urea) through import. Now, the existing stock of about 300,000 MT of urea is said to be sufficient to meet the demand for the ongoing Boro season until June. But then how are the farmers going to get fertilizer for the upcoming Aman season (June-August)? Notably, Aman is the country's second largest crop.
The domestic fertilizer production situation is unlikely to improve soon as the domestic gas supply crunch is going to persist indefinitely until the government takes steps to explore fresh gas reserves from the onshore as well as offshore blocks. But that is an issue to be considered over the long haul. For now, import is the best option to meet the fertilizer need at least for the Aman season. But the war on Iran imposed by US-Israel and the resulting closure of the Strait of Hormuz by Iran has complicated matters. It is worthwhile to note that approximately 25 to 35 per cent of global seaborne trade in fertilizers takes place through the narrow passage called the Strait of Hormuz.
Bangladesh sources its fertilizers, mainly urea and DAP, from the Gulf countries including Saudi Arabia, the United Arab Emirates (UAE) and Qatar. Supply of fertilizers from those sources is uncertain, even if those countries are willing to sell fertilizer amid the war situation. That is mainly because of the blocking of the Strait by Iran. The short-lived (two weeks') fragile ceasefire when Iran unblocked the Strait for a short while is again over due to resumption of warlike situation in the Gulf. Against this dicey backdrop, the Bangladesh Chemical Industries Corporation (BCIC), who owns the fertilizer plants, has been in a desperate search for other possible sources other than the Gulf countries for importing urea. To this end, last month, BCIC invited an international tender to supply 200,000 MT of urea. But no bidder responded to that tender. This clearly demonstrates the volatility of the global fertilizers market. According to the World Bank (WB)'s latest commodity price data, urea prices have increased by 50 per cent compared with what it was before the war started. Similarly, the prices of DAP and triple superphosphate (TSP) have also gone up. In fact, there are few suppliers nearby who can quote a competitive price for urea at such uncertain times.
Even so, the government is learnt to have been contacting countries from Brunei to far-off Russia, Ukraine, even Latvia as possible suppliers so that fertilizers import through the Strait of Hormuz could be avoided. Though Saudi Arabia has reportedly agreed to supply 40,000 MT of urea, that too is uncertain as the Strait remains closed. In the circumstances, to avoid the failure of Aman crop, the government should go all-out to procure fertlizer from any source even if the price is high.
