Sanctions on Russia, Belarus: Bangladesh’s potash import line disrupted

Black_cats · May 8, 2022

Sanctions on Russia, Belarus: Bangladesh’s potash import line disrupted

Importers shift to Canada, Jordan for key chemical fertilizer

File photo of a farmer applying urea as fertilizer during the process of preparing seedbed for paddy cultivation
Syed Zakir Hossain/Dhaka Tribune
Reaz Ahmad
May 5, 2022 10:45 AM

A sanction-induced supply disruption has forced Bangladesh to start shifting to alternate suppliers for potash fertilizer, a key soil nutrient for its agriculture.

With no immediate solution to the Ukraine conflict in sight, both public and private sector fertilizer importers are now relocating their import source for potash from the Black Sea zone to Canada, market sources confirmed to Dhaka Tribune.

Pre-war US sanctions on Belarus’ state-owned potash producer, Belarus Potassium Corporation, in late 2021 and subsequent sanctions on Russia earlier this year following Russia’s invasion of Ukraine have forced Bangladesh to look for alternate import sources, including Canada and Jordan.

Earlier, Bangladesh also shifted to India for wheat, away from traditional importing countries Russia and Ukraine.

In recent years, Bangladesh sourced 80% of its potash requirements from Russia and Belarus and about 20% from Canada, said officials at the Bangladesh Fertilizer Association (BFA).

The BFA represents the country’s fertilizer and plant nutrient importers and traders.

“Due to sanctions and payment-related complications, our members are no longer able to import potash from Russia or Belarus,” BFA Executive Secretary Riaz Uddin Ahmed told Dhaka Tribune on Thursday.

“We have a projected 0.8 million tons of potash requirement in Bangladesh this year and both private and public sectors are trying to manage imports from Canada and Jordan. We’ve sealed a deal for 0.2 million tons of potash recently with Canada and another import deal is expected later this month,” the BFA official said.

Asked about costs, he acknowledged that Bangladesh is required to pay in higher figures while importing from Canada in comparison to import prices in the case of Belarus or Russia.

Earlier, Agriculture Minister Dr Muhammad Abdur Razzaque said that against an import tender, the government got a price quotation for potash at $1200 a ton on April 25 – which is four-folds higher than last year’s price of $300.

Quoting analysts, Reuters reported earlier this week that fertilizer makers are set to post their biggest quarterly profits in years, following a supply squeeze of essential crop nutrients due to the Ukraine crisis.

The world’s top fertilizer makers are expected to benefit as sanctions on Russia and Belarus, the world's No 2 and 3 producers of potash, sent prices of the key fertilizer nutrient to levels not seen since the 2008 food crisis.

Such soaring prices forced Bangladesh to increase its subsidy on fertilizer from just over Tk7,000 crore in the last fiscal to over Tk30,000 crore in this financial year.

In the second week of March this year, when the Director General of the Food and Agriculture Organization of the United Nations (FAO), Qu Dongyu, was attending a regional conference in Dhaka, he warned that supply chain and logistical disruptions to Ukrainian and Russian grain and oilseed production as well as restrictions on Russia’s exports would have significant food security repercussions.

Qu Dongyo had then advised countries dependent on food imports from Russia and Ukraine to look for alternative suppliers to absorb the shock.

The FAO recently called for a global Food Import Financing Facility (FIFF) to help poorer countries deal with surging prices as a result of the war in Ukraine. According to FAO simulations, the Ukraine conflict could result in as many as 13.1 million more people going hungry between 2022 and 2026, compared to the baseline.

Importance of potash in Bangladesh agriculture

Bangladesh’s agriculture has witnessed rapid growth, somewhat matching the population growth in the country over the past two decades. Chemical fertilizer use has had a big role behind farm sector yield boosts.

Bangladesh saw its potash use increasing nearly eight-fold from 0.1 million tons in 2001-02 to 0.75 million tons in 2020-21.

According to the BFA data, the Bangladesh Agricultural Development Corporation managed to import over half a million tons of potash in the last fiscal, with a private importer supplementing it by over 0.2 million tons.
Bangladesh is among the 12 top importers of potash with its import registering over 13% yearly growth since 2014.

Importance of Canada as potash supplier

Canada currently supplies nearly a third of the world’s potash, with mines in Saskatchewan containing half of the world’s known potash reserves.

The North American country has supplied Bangladesh with more than one million tons of potash since 1972. However, the export line was geared up only after Canada and Bangladesh had embarked upon the first government-to-government agreement in April 2014 on the export of high-quality potash fertilizer to Bangladesh.

Bangladesh mainly imports wheat, pulses, canola oil and potash from the Canadian province of Saskatchewan.

Bangladesh has emerged as one of the top 10 export destinations for agricultural products grown in Saskatchewan, a North American prairie best known as the food basket of Canada.

Saskatchewan is home to more than 40% of Canada’s cultivated farmland of over 18.9 million hectares. Saskatchewan is Canada’s primary growing region for grains, oilseeds and pulses and mines for potash.

In 2018, Bangladesh’s agro-product imports from Saskatchewan were worth CAD 223 million, which was over a third of Bangladesh’s total CAD 651 million imports.