" Farmers will not be able to recoup their investment made in the agriculture sector "
MARCH 14
To add insult to injury, the government has decided to reduce the subsidy given to the farmers on the purchase of chemical fertilisers which are widely used to increase agriculture productivity. According to the Ministry of Agriculture and Livestock Development, a meeting of the Fertiliser Supply and Distribution Management Committee has decided to reduce the previously given subsidy of 70.82 per cent and maintain it at 59.04 per cent for the meantime.
The committee has also decided to gradually reduce the subsidy to around 50 per cent as per a statement issued by the ministry. As per the decision, urea fertilser will cost Rs 25 per kg, DPA (Di-ammonium Phosphate) fertiliser Rs 50 per kg and potash fertilser Rs 40 per kg. Before the decision, urea used to be sold at Rs 14 per kg, DAP at Rs 43 per kg and potash at Rs 31 per kg. The prices for the listed fertilisers have now increased by Rs 11, Rs 7 and Rs 9 per kg, respectively.
Earlier, the government was providing a subsidy of 80 per cent on urea, 60 per cent on DAP and 59 per cent on potash.
According to the ministry, the decision was made as per the request of the Ministry of Finance to reduce the subsidy given on the procurement of chemical fertilisers, stating that the prices of the chemical fertilisers have increased in the international market due to the ongoing war in Ukraine and disruption in their supply chain. The Finance Ministry has said the government was losing a big portion of the budget due to the high cost of imports and high subsidy given on the sale of the chemical fertilisers to the farmers. As per the Ministry of Agriculture and Livestock Development, the country needs to import as much as 520,000 metric tons of chemical fertilisers annually. The government has allocated a budget of Rs 38.5 billion to provide subsidies on chemical fertilisers in the current fiscal. The government has decided to procure 331,500 metric tons of chemical fertilisers from India under the G2G provision.
Although the ministry has claimed that the reduced subsidy on the chemical fertilisers will help curb their black marketing, it will have a negative impact on agriculture productivity, especially on paddy, wheat and maize, which are the major cereal crops.
Nepal grows just 40 per cent of its wheat needs, and the rest is imported, mainly from India, which also imposes a ban on its export at times when it faces a shortage in the domestic market. It is the small-scale farmers who will face the brunt of the reduced subsidy.
What about the subsidy given on the LPG, or cooking gas, which is sold at Rs 1,800 per cylinder? The actual price of a LPG cylinder, as per Nepal Oil Corporation, stands at Rs 2,500. Nepali farmers will not be able to recoup their investment made in the agriculture sector, which is already under stress due to imports of cheap food and climate change. It will not encourage youths to take up farming as a profession.
There are some areas where subsidy can be curtailed, and the money thus saved from them can be channelised to give a boost to the agriculture sector.
Reducing the given subsidy on the chemical fertilisers will mean the farmers will stop growing food, and the government will have to import more food from outside by spending more from the state coffers to feed its population.
A version of this article appears in the print on March 15, 2023, of The Himalayan Times.
