Extra Rs. 10 b estimate for fertiliser subsidy

Tuesday, 10 May 2011 00:36 -     - {{hitsCtrl.values.hits}}

By Shezna Shums

An extra Rs. 10 billion is estimated to be the additional cost to the Government following the latest decision to provide fertiliser subsidies for all food crops.

National Fertiliser Secretariat (NFS) Director Ranjan Dharmawardena told Daily FT that currently expenditure of fertiliser subsidies is Rs. 40 billion annually.

With the move to provide fertiliser subsidy to all food crops, the Secretariat estimates this annual expenditure will go up to Rs. 50 billion.

In this new conducive environment for the agriculture stakeholders, the Secretariat is foreseeing a rapid demand for fertiliser as commercial estates as well as agricultural farmers will take advantage of this fertiliser subsidy.

“We have put in place mechanisms to meet this extra demand through imports, as well as have an islandwide network to distribute fertiliser with the help of the private sector,” highlighted Dharmawardena.

“We recognise farming communities who will utilise fertiliser and estimate that more people will identify and use land for agricultural purposes,” he noted, adding that such fertiliser has to be applied in the proper scientific manner to enhance production.

“With this fertiliser subsidy and the increase in agricultural activity, we hope to ensure food security in the country,” explained Dharmawardena.

For paddy cultivation alone, Sri Lanka on average per annul consumes a total of 350,000 metric tonnes of urea, 125,000 metric tonnes of PSP Phosphate Fertiliser and MOP or Muriate of Potash, amounting to 110,000 metric tonnes.

With regard to other crops, Sri Lanka consumes urea amounting to 203,000 metric tonnes, PSP amounting to 9,600 metric tonnes and 138,000 metric tonnes of MOP per year.

Fertiliser is mainly imported from China given the initial cost of manufacturing fertiliser and the difficulty in transporting the sulphuric acid, due to which it is more economical and efficient to import the fertiliser. “At one time Sri Lanka did manufacture fertiliser, but on a very small scale,” noted Dharmawardena.

The most fertiliser is used in the North Central, Eastern, Northern, Wayamba, Hambantota South, Monaragala Uva and Badulla areas and some parts of Ratnapura, Kandy and Matale.

“Most of the fertiliser is used in these districts because of the high potential for paddy cultivation and the high yield expected,” commented Dharmawardena. “Because Sri Lanka has two seasons – Yala and Maha – the soil has to be enriched for cultivation, which is why fertiliser is needed.”

Furthermore, he explained that the potential land for paddy cultivation stands at 870,000 hectares. During the Yala harvest Sri Lanka harvests about 540,000 hectares of paddy land and for the Maha cultivation, a total of 740,000 hectares of land is cultivated for paddy.

International fertiliser prices are unpredictable as the prices vary during the winter season in some countries and other factors that affect fertiliser affect prices in turn.

However, the Secretariat has taken these factors into consideration to suit the prevailing price of fertiliser. Current international fertiliser prices are actually lower than they were during 2008.

The fertiliser subsidy used to be provided for the paddy on a large scale and tea, rubber and coconut cultivations to some extent. However, even with this subsidy coconut plantations were struggling while in some cases tea estates too limited their fertiliser application.

A 50 kg bag of fertiliser for paddy will continue to be given at the prevailing price of Rs. 350. For all other crops an unmixed fertiliser bag of 50 kg will be given at a subsidised price of Rs. 1,200, while a mixed fertiliser bag of the same weight will be priced at Rs. 1,300.

This fertiliser will be available freely at all State and private sector fertiliser outlets without the necessity of filling out of any forms. The 50 kg bag of fertiliser was earlier available at a price ranging from Rs. 3,500 to Rs. 4,000.

This decision was arrived at following a meeting with the Secretary to the Finance and Plan Implementation Ministry Dr. P.B. Jayasundera.

Under this scheme the fertiliser subsidy was previously available only for paddy and some crops, but it will now be available for all crops with immediate effect.