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| Sunday, 23 March 2003 |
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| News Business Features Editorial
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Non - payment of subsidy hits fertiliser imports Private sector Fertiliser importers last week appealed to the government to pay the long overdue subsidy payment of Rs 1.2 billion as banks have declined to finance new imports which would result in a serious fertilizer shortage in the country. They expressed fears that they would not be able to cater to the next Yala season's fertiliser requirements. It would be a big blow to the paddy farmers, Lakshman Niyangoda, Baurs, Director told the media. "Despite numerous discussions and communications with the Ministries of Agriculture and Finance and the National Fertiliser Secretariat since July last year, no concerted effort has been made by the government to make the due payments," he added." Niyangoda said that as a result of the government not paying the subsidy money due to them, they have to pay interest to banks and the collective interest payments to date stands at Rs 200 million. The interest alone is a staggering amount and if the situation continues we would not be able to survive for long he added. During the last few years, despite the financial constraints the companies have been extending their co-operation to the farmers by giving the required fertilizer on time, but we cannot withstand the delay anymore as the interest due to the banks is skyrocketing. Two fertilizer companies have already closed down and the non payment of subsidy money by the government was a major cause besides other concerns. The delay on the part of the government over subsidy payments have been there for three years and we are yet to get our dues from July last year although the agreement was that the payment should be made three weeks from the date of receipt of the claim. Fertilizer is an essential component of agriculture and 70 percent of the requirement of the country is imported which amounts to about 550,000 metric tons. The major share of fertilizer imports is urea, which amounts to about 350,000 metric tons per year. The majority of the urea is used by paddy farmers and the rest by by tea, rubber and coconut plantations, he said. The companies are facing liquidity problems as the losses on bank interest has to be borne by the respective companies. Tracing the history Niyangoda said the new fertiliser subsidy scheme was reintroduced in October 1994 for Urea, Muriate of Potash, Tripple Super Phosphate (TSP) and Sulphate of Ammonia (SA). In 1997 the scheme was revised and only Urea qualified for subsidy payments. The main purpose of the subsidy was to provide fertiliser to the farmer at rates lower than that of world market prices. Under this scheme the government determined that the maximum selling price of Urea should be Rs. 7000 per metric ton. This scheme was also changed in October last year, fixing the rate of the subsidy applicable for Urea at Rs. 6000 per metric ton, regardless of the international market price," he said. The fixed rate has caused the farmers to buy fertiliser at varying international market prices. He said the war situation in the Gulf would also result in increased fertiliser prices in the local market. |
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