Rising Global Prices Threaten Nepal’s Fertiliser Supply

The state-owned Agriculture Inputs Company Ltd (AICL) has said it will be unable to procure the required quantity of chemical fertiliser this fiscal year due to soaring prices in the international market.

The government has allocated Rs 28.82 billion in the current fiscal year (FY 2025/26) to purchase 600,000 metric tons of chemical fertiliser. However, the company said rising international prices mean the target cannot be met.

AICL Managing Director Bishnu Prasad Pokharel said the price of urea stood at USD 400 per metric ton in the international market as of Sunday. DAP costs USD 680 per metric ton, while potash is priced at USD 290 per metric ton. These rates are significantly higher compared to previous years, he added.

According to Pokharel, tenders have been awarded for only 471,300 metric tons so far. “Given the sharp rise in international prices, we cannot procure more than this quantity. This year, we are compelled to buy urea at USD 590 per metric ton and DAP at USD 900 per metric ton. As a result, the allocated budget is insufficient, and the government needs to increase it,” he said.

The Ministry of Agriculture and Livestock Development estimates that around 180,000 metric tons of fertiliser will be required for winter crops, including wheat, mustard, potatoes and various vegetables. But AICL and the Salt Trading Corporation currently hold only around 105,000 metric tons in stock.

The global fertiliser market has faced high volatility due to the Iran–Israel and Russia–Ukraine conflicts. Russia and Ukraine are major producers and exporters of chemical fertiliser, and the war has repeatedly disrupted supply.

Fertiliser Prices Continue to Rise Globally

According to the World Bank’s Commodity Markets Outlook published on October 29, global fertiliser prices are projected to rise by 21 percent by the end of 2025 compared to last year. Prices have increased month-on-month throughout 2025, with the average price in the third quarter 30 percent higher than the same period in 2024.

Urea prices, for example, surged by 36.6 percent year-on-year in September, reaching USD 461 per metric ton. The report attributes the price surge to strong global demand and constrained supply. China has maintained restrictions on nitrogen fertiliser exports and limited phosphate exports to support its electric vehicle battery sector.

The World Bank warned that high fertiliser prices may reduce farmers’ profits and adversely affect future crop production.

Government Preparing to Raise Prices

Officials said Nepal is also feeling the impact of rising global prices, and the government is preparing to increase the retail price of chemical fertilisers. According to Govinda Prasad Sharma, Secretary at the Ministry of Agriculture and Livestock Development, a discussion on price adjustment was held at the Office of the Prime Minister and Council of Ministers on Friday.

“Both the Prime Minister and Finance Minister expressed positive views on adjusting prices. They consider it the best option under current circumstances. The Agriculture Ministry can decide and implement the adjustment,” Sharma said.

The government last increased fertiliser prices in 2015 and again attempted to raise them in 2022, but the move was withdrawn following protests from farmers and other stakeholders.

Nepal currently provides subsidies covering up to 80 percent on urea, 65 percent on DAP and 52 percent on potash. Any price adjustment would increase retail prices. At present, a 50-kg sack of urea costs Rs 750, DAP Rs 2,200 and potash Rs 1,600.