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Yala season cultivation: Forex crisis hits fertiliser imports

13 Feb 2022

  • Banks not supplying dollars for imports, orders cancelled: Private sector importers
  • Claim relief promised by Govt. on forex not received yet
  • Govt. needs to import 75,000 MT of fertiliser at estimated cost of $ 52 m
  • Sanctions on Russia may affect fertiliser pricing 
By Skandha Gunasekara  With the Yala season just around the corner, the Government and private sector are faced with the challenge of importing fertiliser, amidst a continued shortage of foreign currency.  One private sector importer has had to cancel an order valued at $ 700,000 due to banks being reluctant to release dollars for payments. This, while the Government estimates that it will need $ 32 million to import approved fertiliser for the cultivation season.  The Yala season, expected to begin in the coming months, will require the importation of certain approved fertilisers as the domestic production of organic fertilisers does not meet the demands of the country’s cultivation needs.  National Fertiliser Secretariat Director General Mahesh Gammanpila said the Government would be importing one of the few approved fertilisers for import under the Green Agriculture programme; mineral potassium chloride, of which 45,000 metric tonnes (MT) would be needed for the Yala season.  “Mineral potassium chloride is one of the accepted fertilisers to use in organic agriculture, according to the SLSI standard. That is the only one the Government is trying to procure from out of the country. For the Yala season we will need 45,000 MT,” Gammanpila said. The annual requirement of imported fertiliser, according to Gammanpila, is approximately 75,000 MT and will cost an estimated $ 52 million. “Annually on average we usually require around 50 kg per hectare and there are 1.3 million hectares of paddy land, so 65,000 MT of mineral potassium chloride will be needed, or around 75,000 MT. However, because we have switched to organic farming, this number may increase and will have to be calculated according to the demand. One MT in the global market is around $ 700 at the moment, so around $ 52 million will be needed for annual potassium chloride needs and around $ 32 million for the Yala season.” However, he noted that the requirements of imported fertiliser and global prices would vary depending on various factors. “I must point out that the amount of fertiliser to be imported will also depend on the demand and how much organic fertiliser is produced locally, so we will have to decide on the numbers given by the Department of Agriculture. Last Maha season we brought 29,000 MT of fertiliser. However, this fertiliser price fluctuates. Last year’s price was higher than the year before. Many factors can affect the price. This type of fertiliser is usually procured from Russia. If it faces economic issues such as international sanctions, then the price could increase and could be more than $ 700 per MT but this will be determined once the competitive bidding starts in the procurement process.” Commenting on the availability of dollars, Gammanpila said that it was the responsibility of the Finance Ministry to oversee such matters.  “The Finance Ministry will have to release the necessary dollars if we are to import fertiliser. That is their responsibility. Local procurement has started. Potassium chloride procurement will start in the coming weeks. It will be a competitive bidding procurement.”  Meanwhile, fertiliser importers in the private sector lamented that they were already facing problems in importing products due to the lack of foreign exchange.  Allied Commercial Fertilizers Chairman K.K. Jayathilake said the company had been compelled to cancel a consignment of fertiliser valued at close to $ 700,000. “We are facing serious difficulties in importing fertiliser, because of the dollar crisis and banks not releasing dollars. This week we had to cancel an agreement because Sampath Bank refused to release dollars. There was a deadline for the agreement and we couldn’t open the Letter of Credit on time. That shipment was 1,500 MT of fertiliser and this order was valued at around $ 697,000. There are more shipments that are pending bank approval.”  He said that they supplied all stakeholders including the Government, adding that they had made applications to begin importing organic fertiliser.  “We supply to the local market and the Government as well. We are not providing to the Government at the moment because it is not dealing with chemical fertiliser, but we deal with everyone else. We have made some applications to bring down organic fertiliser and they are being processed by the National Plant Quarantine Service. The initial samples of these organic fertilisers are still with the Customs and we are waiting for them to clear it. Even if we are to bring down organic fertiliser, we will face the same dollar shortage issue.”  He said that the Government had pledged to provide $ 100 million to the private sector, but it was yet to receive the funds.  Opex Nutricare General Manager Chaminda Perera said his company too was having trouble securing dollars to bring down fertiliser.  “We are also having an issue with dollar availability like many companies. We are importing specialised fertiliser – granular fertiliser. We have not yet finalised the quantity we are to bring down for 2022 and it also depends on the prices.”  He said they hoped to bring down a consignment of 1,000 MT in the coming months and were negotiating with banks for dollars.  “We are currently going to import for April and May. Granular fertiliser is usually more expensive because it’s specialised so it costs around $ 1,700 per MT. Currently we are having issues getting the necessary dollars and are negotiating with some banks.” Meanwhile, All Ceylon Farmers Association National Organiser Namal Karunaratne charged that the Government’s true motives of introducing the green agriculture programme and ban on chemical fertiliser was because of the dollar crisis and the Government’s lack of dollars to import fertilisers. He then said the Government importing rice was more costly than importing chemical fertiliser, adding that imported rice was produced using higher quantities of chemical fertiliser. “But now the Government has to import rice because of the shortage caused by shifting to organic farming. This will cost more than having to import chemical fertiliser. This also defeats the purpose of going for organic farming because the quantity of chemical fertilisers used in Pakistan and India, from where we import rice, are two to three times higher than the quantity of chemical fertilisers that we used to use.”  


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