Price Spike for Agro Inputs as Government Slashes Grants for Chemical Fertilizers

KATHMANDU: The Ministry of Agriculture and Livestock Development (MoALD) announced that, in line with the government policy, grants for chemical fertilizers have been cut. This has come as a blow to farmers, who now face costly inputs for their agricultural endeavours. Prakash Kumar Sanjel, MoALD spokesperson, provided further commentary on the matter.

“As per the revised price, urea will be dearer by Rs 11 per kg, Diammonium Phosphate (DAP) by Rs 7 per kg and potash by Rs 9 per kg,” Sanjel stated.

Farmers in the region have been dealt a blow with news of an increase in the price of essential inputs. Urea, which was previously available for Rs 14 per kg, will now be supplied at Rs 25 per kg, while the prices of DAP and potash have gone up to Rs 50 and Rs 40 per kg respectively. This is a major setback for farmers who rely heavily on these inputs in order to maximize their yields.

The Ministry of Agriculture and Livestock Development (MoALD) has reported an 11.78 percent decrease in the grant amount for agricultural inputs. “As of now, the government grant makes up 70 percent of the total cost, which has now been reduced to 59.4 percent,” Sanjel stated. 

The Ministry of Agriculture, Land and Environment has announced a reduction in the grant on fertilizers from the government. Urea, DAP and Potash will now receive 64.49%, 52.38% and 46.09% respectively, down from 80.11%, 59.40% and 58.20%. According to the MoALD, this is a measure being taken by the Ministry of Finance to reduce dependency on imported fertilizers and help minimize government spending costs.

Farmers and insurers alike have been faced with the prolonged delay of reimbursements for government-announced grants on premiums for farm insurance policies purchased between October 2021 and April 2022. The Ministry of Agriculture, Land, and Development (MoALD) has been blamed for taking too long to reimburse a total of Rs 75 million in dues owed.

Insurance companies sold insurance policies worth Rs 1.59 billion to farmers during the period, with a premium of Rs 93.82 million to be collected by insurers.

The Nepal government rolled out the Agriculture and Livestock Insurance program in 2013/14 to mitigate losses and damages to the agricultural sector. In the first stages of this initiative, there was a 50 percent subsidy on premium costs. Later, this subsidy amount was increased to 75 percent, and eventually 80 percent. Despite these efforts, it appears that this program is not yet having its desired effect at the farmers' level.