On March 13, the Fertilizer Supply and Distribution Management Committee of the Ministry of Agriculture and Livestock Development (MoALD) decided to reduce the subsidies on chemical fertilizers by 11.78 percentage points.
By slashing the subsidy, the government increased the market prices of chemical fertilizers. The ministry had increased the price of Urea by about 78 percent while that of DAP and Potash by 16 and 29 percent, respectively. Among the chemical fertilizers imported into Nepal, the share of Urea is 56 percent while that of DAP and Potash is 42 percent and 2 percent, respectively. With Monday's decision, the government subsidy on Urea fertilizer will remain at 80 percent, on DAP at 59 percent earlier, and on Potash at 58 percent. The government has been subsidizing 70.82 percent of the import of chemical fertilizers. The March 13 decision had brought it down to 59.04 percent. While slashing the subsidy, the MoALD had said that it plans to limit the subsidies to 50 percent. As the country has to spend a lot of budget on subsidies due to the ever-increasing price of chemical fertilizers in the international market, the ministry claimed that the fertilizer price has to be adjusted. The government had allocated Rs 15bn for the import of chemical fertilizers in the current fiscal federal budget. Since the amount was insufficient, the MoALD said that an additional Rs 23.5bn has been managed to ensure the fertilizer imports. According to the ministry, the annual demand for chemical fertilizer in the country is 520,000 tons. However, the government has been failing to supply fertilizers as per the demand. According to the ministry, there is an agreement to import 333,500 tons of chemical fertilizers for the current financial year. So far 237,500 tons have been imported and the remaining 94,000 tons are to be imported. Despite the import, it has been estimated that there will be a shortage of 90,000 tons of fertilizers for the upcoming paddy plantation season.
