April 17: It has become a regular phenomenon for Nepali farmers to face extreme shortage of chemical fertilizers every year during the main planting season. According to government authorities, they often fail to import fertilizer on time due to lack of adequate budget for fertilizer procurement, failure of procurement process and lack of provision for back-up tenders.
The adverse effect of fertilizer shortage has also started to be seen in Nepal's gross domestic product (GDP) in recent years. During the last decade, the contribution of agriculture sector in GDP decreased from 32.7 percent to 23.9 percent. According to the Ministry of Agriculture and Livestock Development, 700,000 metric tons of chemical fertilizers are required per year for a total of 3.391 million hectares of land. At least a minimum of 520,000 metric tons of fertilizer is required in a year even if it is used less in amount. However, the ministry's data shows that not more than 400,000 metric tons of chemical fertilizers have been supplied in any year in the last seven years.
Although tenders were issued for the purchase of 331,500 metric tons of fertilizer till the 8th month of the current fiscal year, it seems that only 159,000 tons have been supplied. At this pace, it is not possible to import all the remaining fertilizers in the next three months. Stakeholders say that fertilizer could not be supplied on time due to the weakness of government policies and regulations. Joint Secretary of the Agriculture Development Division under the Ministry of Agriculture and Livestock Development Dr. Rajendra Prasad Mishra said that in terms of the country's needs, the budget initially set aside by the government for the purchase of fertilizers is low. He says that even if the resources are confirmed later, it will prolong the procurement process.
Mishra says that there is no provision for adjusting the price increase, no budget management to arrange for backup tenders and buffer stock, and there is a problem in the supply of fertilizers. According to him, since 20 to 30 percent of the procurement process fails, such arrangements must be made in the budget to prevent supply disruption.
“A bidding period of 45 days has been set for the purchase of fertilizer. If the bid is unsuccessful, the bid should be invited again with a period of 21 days, which prolongs the procurement process. The farming season in North India and Nepal is the same, due to which the port and rail transport services are under heavy pressure. Due to this, even the purchased fertilizers cannot be supplied to Nepal on time,” Mishra told New Business Age.
Bishnu Pokhrel, managing director of Agricultural Inputs Company Limited says that the current tender period is too long to buy items whose prices change weekly, such as chemical fertilizers. He argues that the current tender period should be shortened to strengthen the supply. Pokhrel complains that even though the Agricultural Inputs Company has been taking initiatives for the amendment of the Procurement Act for the past 10 years, it has not been possible. He said, “Until the Procurement Act is amended, the problem of delay in fertilizer supply will continue to persist in Nepal.”
According to the Chemical Fertilizer Procurement Act, the supply chain for fertilizer procurement is 227 days from the date of issuing the tender notice to the delivery of the goods. According to the ministry, if the process is prolonged, it will take up to 260 days to deliver the fertilizer. Since the supply chain is very long, the process has to be started as early as October of the previous year to buy the fertilizer required in next May-June.
Joint Secretary Mishra says that instead of the method of buying fertilizers according to the budget, a policy and program should be implemented by determining the quantity of 500,000 to 600,000 metric tons of fertilizers to be supplied annually.
