“According to Bangladesh Bank, the country spent about USD 2.62 billion on fertiliser imports in FY2024-25. During the previous fiscal year, the import bill exceeded USD 4 billion-a staggering 223 percent rise from the year before”
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Agriculture remains the lifeline of Bangladesh's economy, sustaining rural livelihoods and ensuring national food security. The country's near self-sufficiency in food production owes much to the extensive use of fertiliser, irrigation, and quality seeds, among which fertiliser remains indispensable. However, the sector now faces a serious challenge due to gas shortages, heavy reliance on imports, and the government's proposed gas price hike. This policy appears untimely and could jeopardize agricultural stability and broader economic resilience.
Bangladesh's annual fertiliser demand stands at around 6.84 million metric tons, with urea accounting for 2.7 million tons. Domestic production can meet only 25 to 30 percent of this requirement, forcing the country to import more than five million tons every year. Such dependency exposes the nation to global price fluctuations and supply chain disruptions, particularly amid geopolitical tensions like the Russia-Ukraine war. Most imports come from Middle Eastern countries such as Saudi Arabia and Qatar.
According to Bangladesh Bank, the country spent about USD 2.62 billion on fertiliser imports in FY2024-25. During the previous fiscal year, the import bill exceeded USD 4 billion-a staggering 223 percent rise from the year before. This heavy reliance puts immense pressure on foreign reserves. The imported fertiliser costs around Tk 56,547 per tonne, while local production costs are significantly lower-approximately Tk 38,000 per tonne when gas prices remain steady. Despite this advantage, many local factories remain idle due to inadequate gas supply, eroding the benefits of domestic production.
Even with a gas price hike, producing fertiliser locally remains cheaper. Estimates show that with gas priced at Tk 30 per cubic meter, the cost of producing one kilogram of urea would be Tk 46-still lower than the import cost of Tk 61. Yet, the chronic gas shortage means plants cannot operate efficiently. In FY2024-25, Jamuna Fertilizer Company Limited was shut for 361 days and Chattogram Urea Fertilizer Company Limited for 273 days due to gas scarcity. On average, fertiliser plants received only 116 MMCFD of gas against a demand of 245 MMCFD. This shutdown caused massive financial losses-Chittagong Urea Fertilizer Limited reportedly loses around Tk 4.5 crore daily, while Shahjalal Fertilizer Factory loses about Tk 50 lakh.
The overall gas supply in Bangladesh remains insufficient, with daily supply around 2,453 MMCFD against a demand of 3,800 MMCFD in FY2025. This shortage leaves vital sectors such as fertiliser manufacturing vulnerable. Raising tariffs under such conditions adds cost without boosting output. Petrobangla's recent proposal to raise the gas price by 150 percent-from Tk 16 to Tk 40 per cubic meter-has raised widespread concern. Even the Bangladesh Energy Regulatory Commission's suggested price of Tk 30 seems unjustified when plants operate below capacity. Citing higher LNG import costs cannot justify such a steep rise, as it would only worsen inefficiency and deepen dependence on imports.
The government's inability to ensure uninterrupted gas supply makes any price increase counterproductive. Higher tariffs would escalate production costs, raise the price of fertiliser, and expand the subsidy burden. The government already spent about Tk 15,000 crore in subsidies during FY2022-23, with projections that it may exceed Tk 25,000 crore by FY2026. Last year's Tk 5 per kilogram rise in urea, DAP, TSP, and MOP prices has already strained farmers who also face higher costs for diesel, irrigation, and seeds. Further increases, whether through reduced subsidies or direct price adjustments, would discourage fertiliser use, lower yields, and threaten food security.
Although authorities assure farmers that subsidies will protect them from rising prices, such measures are fiscally unsustainable. Production costs for seeds, irrigation, and pesticides rose by 10-15 percent in 2024, but farm-gate prices for crops did not increase proportionately. The mismatch erodes profitability and discourages production. Furthermore, unequal gas tariffs between KAFCO and state-run factories create market distortions, while inefficiencies in the fertiliser supply chain force farmers to pay Tk 1-3 more per kilogram than official prices. As a result, the gap between rising input costs and stagnant crop prices continues to widen.
Before implementing any gas price revisions, the government must conduct a comprehensive, data-driven assessment of fertiliser demand, domestic production capacity, and import needs for the next decade. Such analysis should determine whether expanding local production or securing long-term import contracts is more cost-effective. If stable gas supply ensures that local factories can operate efficiently, priority should shift toward modernising state-owned plants and ensuring uninterrupted energy availability.
To align with the Sustainable Development Goals of "zero hunger" and "zero poverty," Bangladesh needs an integrated master plan that forecasts fertiliser and energy demand based on agricultural growth and population trends. A mid- and long-term projection will help balance domestic production, imports, and subsidy policies while protecting both farmers and national reserves.
Food security is the foundation of national stability. A well-calibrated policy that ensures affordable fertiliser, efficient gas allocation, and sustainable domestic production is not only an economic necessity but a moral imperative. Evidence-based and timely decisions today will safeguard Bangladesh's food sovereignty and sustain agricultural growth for generations to come.
The writer is a Macroeconomic Policy Researcher
