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Fertiliser subsidy seriously flawed, farmers may use it for other purposes; Ministry warns President
View(s):By Damith Wickramasekara
The Agriculture Ministry has warned the President’s Office that the proposed scheme to provide a fertiliser subsidy to farmers during the Yala season is flawed.
The Government has decided to provide a fertiliser subsidy amounting to Rs. 20,000 to cultivate one hectare of farmland, and Rs. 40,000 for two hectares. The Treasury is expected to release Rs. 10bn to provide this fertiliser subsidy.
The Agriculture Ministry points out that tenders have already been awarded to two companies to import 31,000 metric tonnes of urea fertiliser. This is despite 34,000 metric tonnes of urea fertiliser imported during the last cultivation season still being in stock. Meanwhile, arrangements have also been made to import another 15,000 metric tonnes of urea.
While the plan was to deposit the funds for the subsidy directly into the farmers’ bank accounts, there was no mechanism to verify whether the funds were used for the purpose they were released for, the ministry pointed out.
In the absence of such a verification process, there was nothing to stop farmers from using the subsidy for everyday priorities instead of the purpose it was issued for, it said.
Moreover, if farmers chose to use the subsidy to buy fertiliser from the private sector instead of the State, the Government runs the risk of being unable to sell the fertiliser it had already brought. This in turn could pave the way for the private sector to create a monopoly in the import and distribution of fertiliser, and this could result in fertiliser prices increasing exponentially.
To avoid such a situation, the ministry had made several proposals. This included introducing a voucher system to farmers when issuing the fertiliser subsidy from State storehouses. Such a system would ensure the funds would be used only for paddy cultivation. It would also free up the Treasury from having to spend extra funds on the subsidy, the ministry said.
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