State to Spend Billions to Shield Farmers From Fertiliser Price Hike

COLOMBO (News 1st); President Anura Kumara Dissanayake has outlined a series of measures to manage fertiliser supply, stabilise urea prices, and expand fertiliser subsidies for farmers, amid rising global prices and increased costs linked to fuel.

Addressing the fertiliser issue, with specific focus on urea, the President said stocks imported under the old price remain with the Department of Agriculture. He said 14,000 metric tonnes of urea imported at the previous price are currently held by the department, while private companies also possess fertiliser stocks.

During initial discussions, fertiliser companies agreed to provide 65 percent of their existing urea stocks to Agrarian Service Centres at the old price. Following further discussions, the companies subsequently agreed to supply all remaining urea purchased at the old price to the government.

The President said the total quantity of urea obtained from both government and private sector stocks is sufficient for two cultivation seasons of paddy farming. However, fertiliser for the third season will need to be procured at significantly higher prices.

He said a fertiliser shipment arrived recently, brought in by four traders offering prices at four different levels, ranging from USD 680 to USD 850 per metric tonne. As a result, there is a risk of fertiliser prices increasing by the third season.

To address this, the President said the government has decided to supply fertiliser for the third season at a fixed price of Rs. 10,200, purchasing urea from companies at higher market prices and selling it at the controlled rate. He said the market price is estimated to be around Rs. 13,500 to Rs. 14,000 per bag, meaning the government will absorb an additional Rs. 3,000 per bag.

The total cost of this intervention is estimated at approximately Rs. 1.7 billion. The urea price for the current Yala cultivation season will remain fixed for paddy farming.

The President said farmers are also affected by rising fertiliser prices combined with increased fuel costs, and these factors must be considered together. He noted that fertiliser subsidies are determined based on clear criteria, including the type of crop cultivated and land extent.

Currently, farmers cultivating paddy receive a fertiliser subsidy of Rs. 25,000, while those cultivating subsidiary crops receive Rs. 15,000. The President announced that the subsidy for paddy cultivation will be increased by Rs. 5,000, raising it to Rs. 30,000.

The subsidy for subsidiary crops cultivated during the Yala season will be increased from Rs. 15,000 to Rs. 18,000.

In addition, the President said small-scale tea plantation owners currently receive Rs. 4,000 per fertiliser bag. He announced a one-time additional payment of Rs. 5,000 per fertiliser bag for small tea holders.

The President said when all these measures are combined, the total expenditure for the expanded fertiliser support programme will amount to Rs. 6.5 billion. He added that a further Rs. 600 million is planned to be spent specifically on fertiliser subsidies.