Nepal is an agricultural country, and fertilizers are a critical component of agriculture; however, fertilizer shortage is a chronic problem in Nepal. Numerous policies, such as Working Policies, Subsidy Policy, Deregulation Policy, National Fertilizer Policy, and Chemical Fertilizer Subsidy policy, were introduced from time to time to address this, but none of them were found to be fully effective. Fertilizers are still not available to farmers at the time of harvesting, and if they are, they are untimed, inadequate, and adulterated in nature.
Nepal doesn’t have its own fertilizer plant; it depends on the formal and informal imports of fertilizer primarily from India and some third countries. While the government mentions establishing a fertilizer plant in the country, according to the Summary Report of chemical fertilizer 2021 which analyzed the feasibility of establishing the fertilizer plant in Nepal, the production of urea with natural gas technology and water electrolysis is subjected to various conditions and restrictions and is currently quite infeasible in Nepal. Additionally, the estimated total project cost under the natural gas method is USD 1251 million and the water electrolysis option is USD 1897 million, as the domestic demand of Nepal is small such huge economic size of the fertilizer plant will place a more financial burden on the government.
The chemical fertilizer import of Nepal is dependent upon the formal and informal imports. Currently, as per formal means chemical fertilizers are supplied by the state-owned company , Agriculture Inputs Company Limited (AICL), and distributed to farmers through the Salt Trading Company Limited (STCL) under a subsidized scheme. The sole purpose of introducing a subsidy policy in chemical fertillizer was to support small and marginalized farmers whose livelihood is primarily dependent on agriculture. Unfortunately, the current subsidy program fails to meet the picking demand of farmers and only benefits the wealthy farmers who can already afford to buy at market prices. And the poor farmers for whom the scheme was actually introduced are forced to pay a high price for the smuggled fertilizers in the black market.
Apparently, the sole dependency on the government poses a significant threat to Nepal and is also one of the source of the country’s perennial fertilizer shortage problem. With both the subsidy policy and government’s sole monopoly on fertilizer import also, farmers are forced to purchase smuggled fertilizers at exorbitant prices, so what is the point of continuing such policies? Why doesn’t the government change these ineffective regulations, stop interfering, and allow the farmers to buy it from the open market at a fair competitive price? The need of the situation is that the government should rethink, revise and reform its policies considering the best interest of the farmer and agriculture sector of the country. Private sector should be permitted to enter and compete in the market. As private importers are profit-oriented, they offer fertilizers on time and extend loans to farmers, making them appealing to rural farmers. So now it is the time for the government to stop acting as a hurdle and pave the way for the farmer to buy the chemical fertilizers from an open and unrestricted market as per their need and let the natural law of demand and supply determine the price.
The Perennial Problem of Fertilizers Shortage in Nepal: Is the government acting as a hurdle?
Nepal is an agricultural country, and fertilizers are a critical component of agriculture; however, fertilizer shortage is a chronic problem in Nepal. Numerous policies, such as Working Policies, Subsidy Policy, Deregulation Policy, National Fertilizer Policy, and Chemical Fertilizer Subsidy policy, were introduced from time to time to address this, but none of them were found to be fully effective. Fertilizers are still not available to farmers at the time of harvesting, and if they are, they are untimed, inadequate, and adulterated in nature.
Nepal doesn’t have its own fertilizer plant; it depends on the formal and informal imports of fertilizer primarily from India and some third countries. While the government mentions establishing a fertilizer plant in the country, according to the Summary Report of chemical fertilizer 2021 which analyzed the feasibility of establishing the fertilizer plant in Nepal, the production of urea with natural gas technology and water electrolysis is subjected to various conditions and restrictions and is currently quite infeasible in Nepal. Additionally, the estimated total project cost under the natural gas method is USD 1251 million and the water electrolysis option is USD 1897 million, as the domestic demand of Nepal is small such huge economic size of the fertilizer plant will place a more financial burden on the government.
The chemical fertilizer import of Nepal is dependent upon the formal and informal imports. Currently, as per formal means chemical fertilizers are supplied by the state-owned company , Agriculture Inputs Company Limited (AICL), and distributed to farmers through the Salt Trading Company Limited (STCL) under a subsidized scheme. The sole purpose of introducing a subsidy policy in chemical fertillizer was to support small and marginalized farmers whose livelihood is primarily dependent on agriculture. Unfortunately, the current subsidy program fails to meet the picking demand of farmers and only benefits the wealthy farmers who can already afford to buy at market prices. And the poor farmers for whom the scheme was actually introduced are forced to pay a high price for the smuggled fertilizers in the black market.
Apparently, the sole dependency on the government poses a significant threat to Nepal and is also one of the source of the country’s perennial fertilizer shortage problem. With both the subsidy policy and government’s sole monopoly on fertilizer import also, farmers are forced to purchase smuggled fertilizers at exorbitant prices, so what is the point of continuing such policies? Why doesn’t the government change these ineffective regulations, stop interfering, and allow the farmers to buy it from the open market at a fair competitive price? The need of the situation is that the government should rethink, revise and reform its policies considering the best interest of the farmer and agriculture sector of the country. Private sector should be permitted to enter and compete in the market. As private importers are profit-oriented, they offer fertilizers on time and extend loans to farmers, making them appealing to rural farmers. So now it is the time for the government to stop acting as a hurdle and pave the way for the farmer to buy the chemical fertilizers from an open and unrestricted market as per their need and let the natural law of demand and supply determine the price.