The government is working to create buffer stocks of chemical fertilisers in each of the seven provinces to ensure that farmers have adequate supply at all times. The scheme is slated to come online this fiscal year, officials said.

Chemical fertiliser has become a political commodity, and Nepali farmers have been plagued by regular shortages when they need the plant nutrients the most, severely slashing their income and hitting the country’s economic growth which largely depends on agriculture.

Scarcities have been recurring annually during the peak crop planting period, especially in recent years with more Nepali farmers going into commercial farming which has pushed up demand.

When the border with India was tightened due to the Covid-19 pandemic, Nepali farmers were put into a right panic as smuggled fertiliser stopped coming. They have habitually depended on the contraband to make up for the shortfall in legitimate supplies.

The crippling effect of the shortage was seen in paddy production this year as Nepali farmers were prevented from performing better even when they had an abundant labour supply and the monsoon rains were the best in the past three decades.

Yogendra Kumar Karki, secretary at the Ministry of Agriculture and Livestock Development, told the Post that they had planned to create a buffer stock of chemical fertiliser in all provinces to ensure the availability of the plant nutrients during critical stages.

“Each province will have a buffer stock of 25,000 to 30,000 tonnes. This inventory will be used in times of crisis. We are aware that any shortage of this vital fertiliser will have any adverse impact on production,” he said.

“If there had been adequate chemical fertiliser, we could have harvested 6 million tonnes of paddy this year,” said Karki. “Even though the growth in output was marginal, it’s still an all-time high.”

Nepal’s paddy production reached a record level for the fourth straight year due to good monsoon rains and an abundant supply of farmhands, even though a severe shortage of chemical fertiliser during transplantation and top dressing caused distress among farmers.

According to preliminary estimates of the ministry, farmers harvested 5.62 million tonnes of paddy, up by a nominal 1.28 percent compared to last year.

Paddy is transplanted in June and harvested in November. The monsoon is the lifeblood of Nepal's Rs3.76 trillion economy which is farm-dependent, as nearly two-thirds of the farmlands are rain-fed. Paddy contributes around 7 percent to the gross domestic product and is the key income source of farmers.

Secretary Karki said that farmers go through the same agony of fertiliser shortages every year, and it was the state's responsibility to ensure that they have adequate supplies. “The government plans a long-term solution to stop the endless problem.”

While the possibility of constructing a chemical fertiliser plant is being discussed, Nepal has also revived talks for a chemical fertiliser offtake agreement with India under which it will buy a fixed amount of plant nourishers from the southern neighbour over a long-term period to avoid the usual scarcity during the peak growing season.

The accord will be secured through a government-to-government deal, said Karki.

According to ministry officials, the discussions are at a preliminary stage.

It normally takes six months to procure chemical fertiliser following a global tender call under the Public Procurement Act. And in case the procurement is cancelled due to price volatility or other factors, there will be havoc in the farm sector.

“The new arrangement made through a government-to-government deal is not required to go through a lengthy procurement process, and it will ensure that farmers have adequate supply during times of shortages,” said ministry officials.

In 2009, in a bid to end the perennial shortages, Nepal signed an agreement with India for 100,000 tonnes of chemical fertiliser (60,000 tonnes of urea and 40,000 tonnes of DAP) annually at import parity prices. The pact allowed Nepal to purchase fertiliser directly without going through the six-month-long tendering process.

Shipments came to a stop in 2015-16 due to protests in the Tarai and an Indian blockade, and the agreement too expired at the end of 2017. In 2018, Nepal had proposed to renew the agreement to procure chemical fertiliser for at least five years at import parity prices.

The proposal was in line with the 10-year Prime Minister Agriculture Modernisation Project introduced in 2017 which aims to boost farm output substantially. The Agriculture Ministry had proposed importing 150,000 tonnes of fertiliser (100,000 tonnes of urea and 50,000 tonnes of potash) in the first year, that is 2018.

The ministry had planned to import 170,000 tonnes in the second year under a government-to-government deal, 195,000 tonnes in the third year and 210,000 tonnes each in the fourth and fifth years.

The expected government-to-government pact has been pending since December 2018, when Nepal submitted the first draft of the proposed memorandum of understanding.

According to a former secretary at the Agriculture Ministry, they had sent the proposal and several rounds of discussions were held. But India refused to provide chemical fertilisers at the import parity price.

According to the Agriculture Ministry, Nepal's annual requirement of chemical fertiliser stands at more than 700,000 tonnes while imports amount to around 300,000 tonnes. Demand for chemical fertiliser has shot up following the spread of commercial agriculture.