Nepal trims India fertilizer import plan to 50,000 tonnes as global prices ease

Nepal has decided to import 50,000 tonnes of chemical fertilizers from India under a government-to-government arrangement, scaling back a previous plan to procure 80,000 tonnes. This decision comes as global fertilizer prices begin to soften, and it is considered crucial for ensuring adequate supply during the ongoing monsoon paddy transplantation season.

The Cabinet had initially approved the Agriculture Inputs Company (AIC) to procure 80,000 tonnes, including 60,000 tonnes of urea and 20,000 tonnes of Di-Ammonium Phosphate (DAP). However, the reduction in volume was prompted by two main factors: the availability of financial resources and declining global market prices. Ram Krishna Shrestha, joint secretary at the Ministry of Agriculture and Livestock Development and chair of the AIC, expressed hope that declining prices might encourage other suppliers to resume shipments.

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Though the Cabinet approved 80,000 tonnes, we have decided to import only 50,000 tonnes of chemical fertiliser. The first is the availability of financial resources, and the second is that prices have started declining in the global market.

The total consignment is expected to cost around Rs7 billion, with the required funds already secured from the Ministry of Finance. Nepal accepted India's price quotation after it fell within the AIC's cost estimates. However, a significant concern remains regarding the delivery timeline, as the standard procurement process can take up to 120 days. Nepal has formally requested India to expedite the shipments, with officials hoping for arrival by mid-August.

Paddy cultivation is vital for Nepal, supporting rural incomes and contributing significantly to economic growth. Economists estimate that a 10% change in paddy production can impact Nepal's economic growth by nearly 0.4 percentage points, underscoring the critical need for timely fertilizer availability. Despite past supply challenges, agriculture officials do not anticipate a severe shortage this season.

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That remains our biggest concern. During the Nepal-India Joint Steering Committee meeting last week, we requested the Indian side to fast-track delivery. We are hopeful that the fertiliser will arrive by mid-August. The Indian side has acknowledged our request.