Experts worry that a shortage of fertilizers could cause a financial crisis.

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Sending money abroad has declined for the third month in a row. Tourists are not flocking to the area. The foreign exchange reserve is diminishing at a higher rate than it was previously. Unseasonal rainfall in October resulted in the destruction of a major portion of the paddy crop. The rate of inflation is on an upward trend. The country is experiencing a cash shortage at the moment.

 

 

 

What do all of these things point to?

Nepal’s economy is in a state of stagnation.

There’s also a fresh source of concern. It has the potential to be significant.

As a result of a major scarcity of chemical fertiliser, which economists predict could endure for months or possibly years, food prices are likely to rise, putting poor nations such as Nepal at risk of experiencing a serious food crisis, according to the experts.

Nir Bahadur Parajuli, a farmer from Kanepokhari in Morang, was successful in obtaining 25kg of diammonium phosphate (DAP) after visiting numerous cooperatives, which are permitted to sell fertiliser at reduced rates.

He is seeding mustard by using only half the typical amount of DAP, which results in a mustard crop. Currently, Parajuli is awaiting the arrival of state-subsidized fertiliser stocks. However, he has a lower chance of obtaining the agricultural nutrient. One-fourth of his land is still fallow, according to him. “There is no doubt that production will decline this year,” he said.

There are tens of thousands of farmers across the country who have prepared their fields for winter crops and are awaiting delivery of the farm’s critical inputs, which are currently unavailable.

Gajendra Bhattarai, a farmer from Hoklabari in Morang, has 2 bigha (1.35 hectares) of land that is uncultivated due to a scarcity of chemical fertilizer in the area. Aamtola, Rangeli, landowner Rudra Bhattarai, who owns two bighas of land, is also in a similar state of hardship.

“I need at least four bags [each weighing 50 kg], but I’ve only been able to secure one bag despite trying for days,” Gajendra Bhattarai explained. “We’re in desperate need of it right now.”

Increased food prices due to lower crop yields could exacerbate inflation in a country where 4.9 million people are multidimensionally poor, accounting for 17.4 percent of the country’s total population, as a result of lower crop yields.

Low yields would have a negative impact on the incomes of small farmers in Nepal, who account for more than 60% of the country’s agricultural industry.

“Everything appears to be in horrible shape,” said economist Keshav Acharya. “The writing is on the wall: the country’s economy is on its way to becoming a disaster if no stronger plans are implemented immediately. “It is important to proceed with caution in this case.” Posting a Photographic File

Despite the scarcity of fertilizer, experts fear that the situation could spiral out of control.

Prices of nitrogen fertilizer, which is one of the most often used fertilizers to increase crop productivity, have reached their highest levels in more than a decade, according to the USDA.

When asked by the whether even developed countries are struggling to meet demand for fertilizer, Pankaj Joshi, deputy general manager of the Salt Trading Corporation, a public-private partnership that sells subsidized chemical fertilizer, responded that even developed countries are struggling to meet demand.

The provision of a continuous supply of chemical fertiliser in nations such as Nepal will be “very difficult,” experts say.

It used to cost $390 per tonne of urea in November, but today the price is $1,025 per tonne, according to Joshi’s calculations. DAP was previously priced at $375 per tonne, but it now costs $1,125 per tonne. This is a scenario that occurs on a global scale.

It is now possible to purchase urea in Nepal for Rs130 per kg, while the state-owned suppliers are only charging Rs14 per kg. The price of DAP has increased to Rs145 per kg, but it is still available at a subsidised rate of Rs43 per kg.

The amount of the subsidy is now greater than 90 percent.

Even Nepal’s neighbor India, with whom Nepal intends to sign a government-to-government agreement to import fertiliser, is one of the countries most adversely affected by a global fertiliser crisis, according to the World Bank. India imports close to a third of its fertilisers and is the world’s largest buyer of urea and di-ammonium phosphate, often known as DAP, according to the United Nations Development Programme.

According to Svein Tore Holsether, chief executive of Yara International, the head of a large fertilizer company, a global of fertilisers is driving up food prices and putting impoverished countries in a state of crisis. “Higher petroleum prices were pushing up fertilizer costs, which in turn was impacting food prices around the world.” Posting a Photographic File

Fertilizer production necessitates the use of enormous quantities of natural gas.

Holsether stated that Yara had been obliged to reduce some output as a result of rising gas prices, which had resulted in supply constraints. According to the chief executive, poor countries would be hurt the worst by the shortages, with crop yields dropping and food prices rising as a result.

“It’s truly frightening; we’re in the midst of a food crisis, and the most vulnerable are being affected most hard,” he said on the BBC’s Today show.

According to sources, agricultural fertilizers have seen a significant increase in price as a result of constrained coal and natural gas supplies, which have pushed some fertiliser companies in Europe to close. Exports from China and Russia have also been curtailed in order to protect domestic supply.

China, which is the world’s largest producer of phosphate, began suspending or severely restricting shipments of phosphate-rich fertilizers in late July, citing environmental concerns. In accordance with reports, the reductions are likely to endure through June of next year.

For the first time, Russia has proposed export limitations on nitrogen and phosphate fertilizers for a period of six months, beginning on December 1.

Nitrogen fertiliser sales are expected to reach $53 billion in 2020, with prices rising by at least 80 percent so far this year compared to last year.

Posting a Photographic File

A chemical fertilizer is absolutely essential for Nepali farmers.

In Nepal, an extreme shortage of fertilisers has already begun to cause disruptions in the winter planting season, which mostly affects crops such as wheat, corn, mustard, and pulses.

“The shortfall is expected to last for a long time.” “We can predict that the scarcity would have a significant influence on the paddy transplantation season in June of the next year,” Joshi added.

Chemical fertilizer has evolved into a commodity with political significance. Experts believe it has the potential to inflame unrest among the country’s politically significant farmers in the run-up to a series of vital elections next year.

“The chemical fertiliser shortage could put the current coalition government in trouble,” said Yam Gaire, a soil scientist who has worked for a variety of organizations, including the International Fertilizer Development Center in Dhaka, Bangladesh. “The chemical fertiliser shortage could put the current coalition government in trouble,” he added.

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“It goes without saying that chemical fertiliser is a political commodity in poor nations like Nepal,” Gaire explained.

The government, he stated, would devote some monies to support chemical fertilisers in the run-up to the important elections scheduled for next year. “However, the question is how long it will continue to provide funding.”

According to reports, strong global fertiliser demand is expected to continue at least through 2023.

According to Joshi of Salt Trading, the burden of the higher cost should be shared equally between the government and the farmers in order to maintain a continuous supply as the price of salt to climb.

“However, legislators would never consider such an unpopular course of action. “Increasing the price of fertiliser will result in the loss of vital electoral votes,” Gaire explained. As fertilizer enhances agricultural yields by at least 20%, a scarcity of the fertilizer could result in a major catastrophe. If Nepal’s fertiliser requirements are not met on time, the country could face a food catastrophe.”

Losses in paddy crops totaling Rs11.87 billion were reported in October as a result of unusually heavy rainfall. A total of 111,609 hectares of paddy were destroyed, resulting in the loss of 424,113 tonnes of paddy.

There is a significant misallocation of resources between demand and supply.

Additionally, the current Sher Bahadur Deuba administration has put aside an additional budget of Rs3 billion to finance the import of chemical fertilisers, on top of the Rs12 billion set aside by the previous KP Sharma Oli administration to fund chemical fertiliser imports.

It is estimated that the cash would be sufficient to finance at least 500,000 tonnes of fertilizers

However, as a result of the increase in worldwide prices, the calculation has changed.

“We are unable to fund even 100,000 tonnes of chemical fertiliser with the budget that has been set up,” Joshi explained. We will need at least Rs65 billion to import 500,000 tonnes of chemical fertiliser at the current exchange rate.

According to the Ministry of Agriculture and Livestock Development, the yearly need for fertilisers is approximately 600,000 tonnes per year.

Another assessment by the United States Agency for International Development (USAID) found that Nepal is heavily reliant on illegal fertilizers, with an estimate that almost 70% of the 600,000 to 800,000 tonnes of fertilisers consumed in the country are improperly imported.

However, because India is one of the countries most adversely affected by a worldwide fertiliser shortage, Nepali officials predict that the fertiliser shortage would grow this year because Nepali farmers who rely on stolen fertiliser will be unable to do so this year.

In the words of Prakash Kumar Sanjel, spokesperson for the Ministry of Agriculture and Livestock Development, “the issue is becoming more severe.” “We have already informed the authorities of the current situation.”

As an emergency measure, the Agriculture Ministry has recommended that the Finance Ministry offer Rs13 billion in aid to help alleviate the problem. “The suggested sum will finance an additional 131,000 tonnes,” Sanjel explained, noting that they had written to the Finance Ministry last week and were waiting for a response when he spoke to reporters.

According to Sanjel, the budget set aside for this fiscal year to cover the import of fertilisers has almost completely been depleted. “Over 100,000 tonnes have already been sold to farmers,” says the spokesman. According to him, a consignment weighing 45,000 tonnes is on its way.

In contrast, the fertiliser stock has been depleted to 35,000 tonnes [30,000 tons of urea and 5,000 tons of DAP], which is not enough to meet demand for even a week’s worth of fertilizer.

“We are putting in numerous efforts,” Sanjel explained.

Following India’s refusal to sign a long-term government-to-government agreement to import fertiliser, Nepal has written to China formally requesting the same, according to Sanjel. “It appears that the situation is difficult. The decision to deal with the oncoming crisis is no longer in our hands.”

According to Sanjel, the anticipated agreement with India is currently on hold.

Posting a Photographic File

It typically takes six months to acquire chemical fertiliser after a global tender call is issued under the Public Procurement Act, according to industry standards. Furthermore, if the procurement is terminated as a result of price volatility or other factors, it causes havoc in the agricultural industry.

According to ministry officials, the new arrangement, which was reached through a government-to-government agreement, eliminates the need for a protracted procurement process and ensures that farmers have an enough supply during times of shortage.

According to the Chinese government’s official mouthpiece, Global Times, Nepal is increasingly acquiring fertiliser from Chinese suppliers because India is also experiencing a scarcity of fertiliser of its own, “underscoring India’s limited ability to fulfill its commitments.”

According to the Nepali Embassy in China, which was quoted in the Global Times on November 23, increased fertiliser imports from China could be expected as a result of the rising demand.

“Even though India has always claimed to be Nepal’s “big brother,” Liu Zongyi, secretary-general of the Research Center for China-South Asia Cooperation at the Shanghai Institutes for International Studies, told the Global Times that India is very likely to satisfy its own needs before supplying Nepal.

This year marks the first time that Nepal has imported chemical fertiliser from the northern border crossing point. In February, Salt Trading secured a contract with the Silk Group to import 4,000 tonnes of fertiliser from the Chinese city of Shigatse via Tatopani. The contract was valued at $1.25 million.

According to the Global Times, Kaushal Kishor Ray, chargรฉ d’affaires of the Nepali embassy in Beijing, the country intends to purchase more chemical fertilizers from China.

.

As Ray explained, “a contract has already been signed to import approximately 15,000 tons of fertiliser from [Northwest China’s Qinghai Province]… if Chinese producers can satisfy the requisite standards and offer competitive rates, they will have a large market [in Nepal].”

Nepal inked a historic oil trade agreement with China in October 2015, reducing its reliance on India, the country’s huge southern neighbor. The agreement is expected to benefit both countries. The move was triggered by India’s imposition of a border blockade, which prevented the importation of any everyday necessities, including petrol.

The oil contract with China, on the other hand, was unable to materialize.

“The majority of countries, including India and China, are taking the issue [of chemical fertilizers] very seriously,” says the UN. “In Nepal, the administration appears to be preoccupied with internal politics,” said Acharya, the economist. ”

“Economy has never been a top focus for Nepali politics.” It is still not the case.”

 

 

 

 

What do all of these things point to?

Nepal’s economy is in a state of stagnation.

There’s also a fresh source of concern. It has the potential to be significant.

As a result of a major scarcity of chemical fertiliser, which economists predict could endure for months or possibly years, food prices are likely to rise, putting poor nations such as Nepal at risk of experiencing a serious food crisis, according to the experts.

Nir Bahadur Parajuli, a farmer from Kanepokhari in Morang, was successful in obtaining 25kg of diammonium phosphate (DAP) after visiting numerous cooperatives, which are permitted to sell fertiliser at reduced rates.

He is seeding mustard by using only half the typical amount of DAP, which results in a mustard crop. Currently, Parajuli is awaiting the arrival of state-subsidized fertiliser stocks. However, he has a lower chance of obtaining the agricultural nutrient. One-fourth of his land is still fallow, according to him. “There is no doubt that production will decline this year,” he said.

There are tens of thousands of farmers across the country who have prepared their fields for winter crops and are awaiting delivery of the farm’s critical inputs, which are currently unavailable.

Gajendra Bhattarai, a farmer from Hoklabari in Morang, has 2 bigha (1.35 hectares) of land that is uncultivated due to a scarcity of chemical fertilizer in the area. Aamtola, Rangeli, landowner Rudra Bhattarai, who owns two bighas of land, is also in a similar state of hardship.

“I need at least four bags [each weighing 50 kg], but I’ve only been able to secure one bag despite trying for days,” Gajendra Bhattarai explained. “We’re in desperate need of it right now.”

Increased food prices due to lower crop yields could exacerbate inflation in a country where 4.9 million people are multidimensionally poor, accounting for 17.4 percent of the country’s total population, as a result of lower crop yields.

Low yields would have a negative impact on the incomes of small farmers in Nepal, who account for more than 60% of the country’s agricultural industry.

“Everything appears to be in horrible shape,” said economist Keshav Acharya. “The writing is on the wall: the country’s economy is on its way to becoming a disaster if no stronger plans are implemented immediately. “It is important to proceed with caution in this case.” Posting a Photographic File

Despite the scarcity of fertilizer, experts fear that the situation could spiral out of control.

Prices of nitrogen fertilizer, which is one of the most often used fertilizers to increase crop productivity, have reached their highest levels in more than a decade, according to the USDA.

When asked by the whether even developed countries are struggling to meet demand for fertilizer, Pankaj Joshi, deputy general manager of the Salt Trading Corporation, a public-private partnership that sells subsidized chemical fertilizer, responded that even developed countries are struggling to meet demand.

The provision of a continuous supply of chemical fertiliser in nations such as Nepal will be “very difficult,” experts say.

It used to cost $390 per tonne of urea in November, but today the price is $1,025 per tonne, according to Joshi’s calculations. DAP was once priced at $375 per tonne, but it now costs $1,125 per tonne. This is a scenario that occurs on a worldwide scale.

It is now possible to purchase urea in Nepal for Rs130 per kg, while the state-owned suppliers are only charging Rs14 per kg. The price of DAP has increased to Rs145 per kg, however it is still available at a subsidised rate of Rs43 per kg.

The amount of the subsidy is now greater than 90 percent.

Even Nepal’s neighbor India, with whom Nepal intends to form a government-to-government agreement to buy fertiliser, is one of the countries most adversely affected by a global fertiliser crisis, according to the World Bank. India imports close to a third of its fertilisers and is the world’s largest buyer of urea and di-ammonium phosphate, often known as DAP, according to the United Nations Development Programme.

According to Svein Tore Holsether, chief executive of Yara International, the head of a large fertilizer company, a global of fertilisers is driving up food prices and putting impoverished countries in a state of crisis. “Higher petroleum prices were pushing up fertilizer costs, which in turn was impacting food prices around the world.” Posting a Photographic File

Fertilizer production necessitates the use of enormous quantities of natural gas.

Holsether stated that Yara had been obliged to reduce some output as a result of rising gas prices, which had resulted in supply constraints. According to the chief executive, poor countries would be hurt the worst by the shortages, with crop yields dropping and food prices rising as a result.

“It’s truly frightening; we’re in the midst of a food crisis, and the most vulnerable are being affected most hard,” he said on the BBC’s Today show.

According to sources, agricultural fertilizers have seen a significant increase in price as a result of constrained coal and natural gas supplies, which have pushed some fertiliser companies in Europe to close. Exports from China and Russia have also been curtailed in order to protect domestic supply.

China, which is the world’s largest producer of phosphate, began suspending or severely restricting shipments of phosphate-rich fertilizers in late July, citing environmental concerns. In accordance with reports, the reductions are likely to endure through June of next year.

For the first time, Russia has proposed export limitations on nitrogen and phosphate fertilizers for a period of six months, beginning on December 1.

Nitrogen fertiliser sales are expected to reach $53 billion in 2020, with prices rising by at least 80 percent so far this year compared to last year.

Posting a Photographic File

A chemical fertilizer is absolutely essential for Nepali farmers.

In Nepal, an extreme shortage of fertilisers has already begun to cause disruptions in the winter planting season, which mostly affects crops such as wheat, corn, mustard, and pulses.

“The shortfall is expected to last for a long time.” “We can predict that the scarcity would have a significant influence on the paddy transplantation season in June of the next year,” Joshi added.

Chemical fertilizer has evolved into a commodity with political significance. Experts believe it has the potential to inflame unrest among the country’s politically significant farmers in the run-up to a series of vital elections next year.

“The chemical fertiliser shortage could put the current coalition government in trouble,” said Yam Gaire, a soil scientist who has worked for a variety of organizations, including the International Fertilizer Development Center in Dhaka, Bangladesh. “The chemical fertiliser shortage could put the current coalition government in trouble,” he added.

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“It goes without saying that chemical fertiliser is a political commodity in poor nations like Nepal,” Gaire explained.

The government, he stated, would devote some monies to support chemical fertilisers in the run-up to the important elections scheduled for next year. “However, the question is how long it will continue to provide funding.”

According to reports, strong global fertiliser demand is expected to continue at least through 2023.

According to Joshi of Salt Trading, the burden of the higher cost should be shared equally between the government and the farmers in order to maintain a continuous supply as the price of salt to climb.

“However, legislators would never consider such an unpopular course of action. “Increasing the price of fertiliser will result in the loss of vital electoral votes,” Gaire explained. As fertilizer enhances agricultural yields by at least 20%, a scarcity of the fertilizer could result in a major catastrophe. If Nepal’s fertiliser requirements are not met on time, the country could face a food catastrophe.”

Losses in paddy crops totaling Rs11.87 billion were reported in October as a result of unusually heavy rainfall. A total of 111,609 hectares of paddy were destroyed, resulting in the loss of 424,113 tonnes of paddy.

There is a significant misallocation of resources between demand and supply.

Additionally, the current Sher Bahadur Deuba administration has put aside an additional budget of Rs3 billion to finance the import of chemical fertilisers, on top of the Rs12 billion set aside by the previous KP Sharma Oli administration to fund chemical fertiliser imports.

It is estimated that the cash would be sufficient to finance at least 500,000 tonnes of fertilizers

However, as a result of the increase in worldwide prices, the calculation has changed.

“We are unable to fund even 100,000 tonnes of chemical fertiliser with the budget that has been set up,” Joshi explained. We will need at least Rs65 billion to import 500,000 tonnes of chemical fertiliser at the current exchange rate.

According to the Ministry of Agriculture and Livestock Development, the yearly need for fertilisers is approximately 600,000 tonnes per year.

Another assessment by the United States Agency for International Development (USAID) found that Nepal is heavily reliant on illegal fertilizers, with an estimate that almost 70% of the 600,000 to 800,000 tonnes of fertilisers consumed in the country are improperly imported.

However, because India is one of the countries most adversely affected by a worldwide fertiliser shortage, Nepali officials predict that the fertiliser shortage would grow this year because Nepali farmers who rely on stolen fertiliser will be unable to do so this year.

In the words of Prakash Kumar Sanjel, spokesperson for the Ministry of Agriculture and Livestock Development, “the issue is becoming more severe.” “We have already informed the authorities of the current situation.”

As an emergency measure, the Agriculture Ministry has recommended that the Finance Ministry offer Rs13 billion in aid to help alleviate the problem. “The suggested sum will finance an additional 131,000 tonnes,” Sanjel explained, noting that they had written to the Finance Ministry last week and were waiting for a response when he spoke to reporters.

According to Sanjel, the budget set aside for this fiscal year to cover the import of fertilisers has almost completely been depleted. “Over 100,000 tonnes have already been sold to farmers,” says the spokesman. According to him, a consignment weighing 45,000 tonnes is on its way.

In contrast, the fertiliser stock has been depleted to 35,000 tonnes [30,000 tons of urea and 5,000 tons of DAP], which is not enough to meet demand for even a week’s worth of fertilizer.

“We are putting in numerous efforts,” Sanjel explained.

Following India’s refusal to sign a long-term government-to-government agreement to import fertiliser, Nepal has written to China formally requesting the same, according to Sanjel. “It appears that the situation is difficult. The decision to deal with the oncoming crisis is no longer in our hands.”

According to Sanjel, the anticipated agreement with India is currently on hold.

Posting a Photographic File

It typically takes six months to acquire chemical fertiliser after a global tender call is issued under the Public Procurement Act, according to industry standards. Furthermore, if the procurement is terminated as a result of price volatility or other factors, it causes havoc in the agricultural industry.

According to ministry officials, the new arrangement, which was reached through a government-to-government agreement, eliminates the need for a protracted procurement process and ensures that farmers have an enough supply during times of shortage.

According to the Chinese government’s official mouthpiece, Global Times, Nepal is increasingly acquiring fertiliser from Chinese suppliers because India is also experiencing a scarcity of fertiliser of its own, “underscoring India’s limited ability to fulfill its commitments.”

According to the Nepali Embassy in China, which was quoted in the Global Times on November 23, increased fertiliser imports from China could be expected as a result of the rising demand.

“Even though India has always claimed to be Nepal’s “big brother,” Liu Zongyi, secretary-general of the Research Center for China-South Asia Cooperation at the Shanghai Institutes for International Studies, told the Global Times that India is very likely to satisfy its own needs before supplying Nepal.

This year marks the first time that Nepal has imported chemical fertiliser from the northern border crossing point. In February, Salt Trading secured a contract with the Silk Group to import 4,000 tonnes of fertiliser from the Chinese city of Shigatse via Tatopani. The contract was valued at $1.25 million.

According to the Global Times, Kaushal Kishor Ray, chargรฉ d’affaires of the Nepali embassy in Beijing, the country intends to purchase more chemical fertilizers from China.

.

As Ray explained, “a contract has already been signed to import approximately 15,000 tons of fertiliser from [Northwest China’s Qinghai Province]… if Chinese producers can satisfy the requisite standards and offer competitive rates, they will have a large market [in Nepal].”

Nepal inked a historic oil trade agreement with China in October 2015, reducing its reliance on India, the country’s huge southern neighbor. The agreement is expected to benefit both countries. The move was triggered by India’s imposition of a border blockade, which prevented the importation of any everyday necessities, including petrol.

The oil contract with China, on the other hand, was unable to materialize.

“The majority of countries, including India and China, are taking the issue [of chemical fertilizers] very seriously,” says the UN. “In Nepal, the administration appears to be preoccupied with internal politics,” said Acharya, the economist. ”

“Economy has never been a top focus for Nepali politics.” It is still not the case.”

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