Farmers in pain as cartels gain

Despite fertile land loss, weather stresses and depleting irrigation water, Bangladesh's agriculture keeps contributing a fifth of the GDP each year. Along with other factors, government's policy support in the form of fertiliser subsidy plays a big part here. But misappropriation of the key agro input by a syndicate involved in shipment and transport, and mismanagement by the authorities, in this case Bangladesh Chemical Industries Corporation, have tainted this otherwise commendable effort. If such large-scale corruption is outrageous, the culture of impunity within the corridors of the BCIC and elsewhere is worrisome. This systematic graft has cost the state about Tk 100 crore each year since 2009. In this four-part report, Hasan Jahid Tusher exposes the corruption in the fertiliser sector. The last part today.

If you were a farmer and went to buy locally produced TSP and DAP, you can't buy it at the government-fixed retail price. You have to pay at least 50 percent more.

It is because two syndicates have been in control of the distribution of these two important fertilisers for around two decades, thanks to a flawed distribution system.

The annual demand for TSP (triple super phosphate) and DAP (diammonium phosphate), two phosphorus fertilisers, is around 15 lakh tonnes, according to the agriculture ministry.

Of this, about 13 lakh tonnes are imported and distributed by the Bangladesh Agriculture Development Corporation. But the distribution of the rest 2 lakh tonnes, produced locally, is in the hands of the syndicates.   

The two syndicates in Chittagong have taken the trade and transport of TSP and DAP in their grip, making hefty profits at the expense of farmers, according to a BCIC probe report. 

When the official price of a bag of TSP is Tk 1,000 and DAP Tk 1,150, farmers pay at least Tk 1,500 and Tk 1,650. This pushes up their production cost, which in turn eats up their profit margin. 

The BCIC only last year acknowledged the existence of these syndicates affecting price and ultimately the farmers, following an internal probe.

HOW THEY OPERATE

One of the two syndicates handles the papers and the other handles the transport.

The first one comprises only five persons, according to documents and sources.

The upazila agriculture officers make the estimate for fertiliser demand in their areas. The DC office approves the estimate and assigns demand orders (DO) to fertiliser dealers. Around 7,000 fertiliser dealers across the country are supposed to submit their DOs to the factories. But the dealers cannot do that.

This syndicate steps in at this stage. It buys the DOs from the dealers and even pays them Tk 100-150 per sack on top of the government fixed prices.

It then sells the DOs to the second syndicate, comprised of 70 people who are all transporters, at a profit.

The second syndicate then buys the fertilisers from the factories with the DOs, delivers those to dealers, and charges the dealers the transport cost and the extra money they had to pay the first syndicate for the DOs.

The dealers then sell the fertilisers to farmers jacking up the prices to cover the extra cost.

Even if a dealer went to the factory directly to buy fertiliser with a DO, he or she would not be allowed to transport the fertiliser unless one of the 70 members of the second syndicate carried it, the sources said. 

Yusuf Khan Mahbub of Rubel and Brothers Ltd, Mizanur Rahman of Padma Transport Ltd, Jamal Uddin of Jamal Enterprise, Akram Haider of Sultana Traders, and Harunur Rashid Manna of Manna Enterprise are in the first syndicate.

Based in Majhirghat of Chittagong, they run their businesses using the names Bangladesh Fertiliser Association (BFA), Chittagong district unit; Cooperatives Trading Corporation (Pvt) Ltd; and Majhirghat Fertiliser Transport Contractors Welfare Association.

These five control the fertiliser dealers across the country with the help of some top officials of the TSP Complex Ltd and DAP Fertiliser Factory, the two BCIC factories in Chittagong, according to sources.

The Daily Star was able to reach four of the five companies, the owners of which are involved in the first syndicate, for comments. 

All of them claimed that they were not members of any syndicate and that they were merely service providers.

They said they get the DOs from dealers via mail and they send their representatives to submit the DOs to the factories. They then receive the fertiliser, ship it and get a service charge.

“It is a baseless allegation. There is no such syndicate here,” said Akram Haider, owner of Sultana Traders. 

He said, “As it is neither possible nor economically viable for the dealers to go to distant places to get fertiliser, they send their DO letters to us through courier. We submit the DO letters to the factories, receive the consignment and send the fertiliser accordingly. We get only Tk 400 to 500 per tonne [20 sacks] in commission for the work,” he said.

Rejaul Karim, manager of Jamal Enterprise, said transport agents only work as representatives of the fertiliser dealers.

Masud Parvez Manik, manager of Rubel and Brothers, said that out of jealousy some people were making the allegation that they were running a syndicate.

Harunur Rahsid Manna, owner of Manna Enterprise, also was of the same opinion.

Meanwhile, dealers say that it does not make sense for them to go all the way to Chittagong to get their allocation. “We collect TSP and DAP through representatives in Chittagong,” BCIC dealer Nazrul Islam Swapan of Noakhali told The Daily Star.

“Our representatives get the fertiliser and ship it to us,” he said, adding that they have to do this as they only get allocation for one tonne of fertiliser at best and that it was not worth going to Chittagong to get it.

Swapan said on an average they buy a sack of TSP and DAP for Tk 1,470 and Tk 1,550 and sell those to farmers with a profit of Tk 40-100.

Dealers say this could be avoided if the fertiliser were handled by the BCIC itself. Zillur Rahman Raju, president of Gaibandha BFA, said, “If the fertiliser was distributed from the BCIC warehouses, we could have gotten out of this and the farmers would pay a lower price.”

BCIC PROBE

The BCIC had formed a probe committee, led by its finance director Md Haiul Kaium, to find the syndicates at play.  

The Daily Star obtained a copy of the probe report submitted in February last year, which also made some recommendations on what the BCIC should do about the syndicates.

Member of the second syndicate and owner of Siddique Enterprise Osman Gani Ripon had told the probe body that alongside his transport business, he got involved with “the illegal fertiliser syndicate and business”.

In his written statement to the probe body, he said a syndicate operates using the names of three organisations (mentioned above) and elaborated how the five people buy DOs and sell those to the second syndicate.

Almost all other persons interviewed for the probe told the investigators they knew about the syndicates.

The probe body recommended that a command area could be built for distributing TSP and DAP from BCIC warehouses, like the distribution of urea.

It also recommended increasing allocation for dealers, regular monitoring of non-urea fertiliser distribution, and following investigation, transfer of officials and staff involved in corruption.

Managing directors of the TSP and the DAP factories should be censured for their negligence in duty, the probe body said, adding that their claimed ignorance of existence of the syndicates was not acceptable.

Amal Kanti Barua, managing director of DAP Fertiliser Company Ltd, Rangadia, Chittagong, told The Daily Star that there was no negligence in duty on their part.

He said he did not know about the syndicates since it was a matter outside his factory.

The BCIC sent a letter to the agriculture ministry in February last year as to whether funds could be managed for the transportation of TSP and DAP to the BCIC warehouses in different districts.

In response, the ministry advised the BCIC to contact the finance ministry for fund allocation but the BCIC did follow through with the finance ministry and the syndicates remain untouched. 

BCIC Chairman Mohammad Iqbal told The Daily Star that they are aware of the syndicates and that the process to get rid of the syndicates was on. He said the police station and the district administration had been informed about the syndicates and asked to act.

“Two officers of the relevant factories have been transferred,” he said, adding that there was no evidence of others' involvement.

“But we can't dismantle the syndicate overnight as fertiliser distribution is involved. We are working on it.”