Fertilizer price and subsidy policies in Bangladesh

Abstract

Fertilizer marketing and price policies in Bangladesh are becoming increasingly liberal. Reforms that began in 1983 with the New Marketing System, and continue into the present with direct procurement of urea and gypsum fertilizers from factories, have led to an expanded role for the private sector and to important price and supply availability benefits to farmers. Despite the virtual elimination of urea subsidies in 1986, prices and consumption have improved due to growth in competition and other nonprice factors. Large subsidies continue to exist on phosphate and potash fertilizers. These subsidies and import restrictions in general on the private sector are problematic to competitive procurement of fertilizers. Policy options are recommended to overcome these problems, and benefits to farmers from complete price and market deregulation are estimated.