Threat of Fertilizer Shortage for Planting Season; Government Requests Assistance from India
Due to escalating tensions between the US-Israel and Iran, the import of 94,000 tons of chemical fertilizer already purchased by Nepal has been blocked. The government has formally requested India to provide 150,000 tons of fertilizer through a government-to-government (G2G) mechanism. With fertilizer prices doubling on the international market, suppliers who have already signed contracts have declared force majeure. April 26, Kathmandu. While the new government expresses a national commitment to streamline the supply and distribution of chemical fertilizers, international geopolitical tensions are threatening Nepal’s agriculture sector.
Despite the Prime Minister’s Office preparing a draft fertilizer purchase calendar based on necessary data to improve the distribution system, ongoing warfare in West Asia has disrupted the supply of chemical fertilizers expected in Nepal. The tension between the US-Israel and Iran has completely halted the import of more than 94,000 tons of chemical fertilizer under purchase agreements. Although the tender process is underway for an additional 90,000 tons, experts warn that the ongoing conflict and blockage of the ‘Strait of Hormuz’ will likely cause farmers to face fertilizer shortages during the main planting season.
The Agriculture Inputs Company Limited, Salt Trading Corporation Limited, and the Ministry of Agriculture and Livestock Development, responsible for fertilizer supply, have informed that existing stockpiles in warehouses and in transit will only be sufficient until the Nepali month of Ashad (mid-June to mid-July). The declaration of force majeure by contracted suppliers due to rising international prices and disruptions in the Hormuz Strait and other waterways is expected to severely impact the post-Ashad agricultural season. Due to fertilizer shortages and price increases internationally, suppliers are reluctant to bring fertilizer to Nepal. No interested parties responded to the government’s recent two tenders for urea fertilizer supply. Furthermore, a subsequent tender with a 21-day extension also attracted no applications from shipping companies, according to the Agriculture Inputs Company.
Amid budget constraints for fertilizer procurement, soaring prices, and the complex potential cancellation of new tenders, the government has sought assistance from India through the G2G arrangement to avert a possible agricultural crisis. Dr. Ram Krishna Shrestha, Joint Secretary at the Ministry of Agriculture and Livestock Development and head of the Agriculture Development Division, stated that Nepal currently has a total of 170,000 tons of chemical fertilizer available, which will meet demand until Ashad. He said, ‘Including stock in warehouses and fertilizer currently in transit, the total is 170,000 tons. This supply will be adequate until Ashad, but the main concern is for after Ashad. If the Hormuz Strait remains closed, there is a risk of fertilizer shortage starting in Shrawan (mid-July to mid-August).’
