Latest official statistics show rice growers' investment on irrigation has risen to Tk 3,600 crore from Tk 1,680 crore in 2001.

The BNP-led coalition government has raised diesel price to Tk 30 a litre in the fifth price increase compared to Tk 14 when it took office in October 2001.

Farmers use as much as 12 lakh tonnes of diesel a year to irrigate their land for growing the major rice crop -- boro -- and rabi crops during the dry season. So, even a small hike in diesel price affects them badly.

Irrigation accounts for 28 percent of the total cost of rice cultivation and Boro constitutes over 55 percent of rice production in the country.

Sources pointed out that the government is taking no steps to make agriculture profitable to the largely marginalised farming community, and shelved for over two years the Cabinet Committee decision on August 11 in 2003 for providing diesel subsidy to farmers.

The government-fixed price for procurement of rice also shows its indifference to the reality that farmers have to make much higher investment for its production.

While consumers are not getting even coarse verities of rice at less than Tk 18 a kg, the government offered only Tk 14.50 per kg for procuring rice from farmers late last year. But failing to procure rice at such a poor price, the government finally hiked the price offer to Tk 16 a kg last week.

Officials admit the government's price offer does not reflect the market situation and the reality that over the last four years, cost of rice production has gone way beyond too conservative official calculations.

The government's budgetary allocation of Tk 1,200 crore in subsidy for farm sector this fiscal year (2005-06) now appears far short of the requirement to cover the fertiliser price gap. The demand for urea this year is projected at 28 lakh tonnes while the country produced 19 lakh tonnes. For each tonne of locally produced urea, the government has to provide Tk 1,200 in subsidy to bridge the gap between production cost (Tk 6,000) and sale price (Tk 4,800).

Moreover, the government has to bear a subsidy of Tk 13,200 per tonne of imported urea as import cost is Tk 18,000 a tonne.

Bangladeshi farmers usually spend $53 to irrigate one hectare of farmland compared to $18 in Thailand and Vietnam, $19 and $ 31 in West Bengal and Punjab states of India, according to the Agriculture Sector Review (ASR) conducted recently by the UN Food and Agriculture Organisation (FAO) for Bangladesh's agriculture ministry.

Meanwhile, the government has granted a power tariff rebate for about 10 percent of the farming community, who use electricity-run irrigation pumps. But it is yet to meet the subsidy needs of about 90 percent farmers who use diesel-run shallow pumps to irrigate cropland.

There are around one million diesel-run pumps as against hardly one lakh electricity-run ones in the country. Erratic power supply also causes troubles for farmers using electricity-run pumps.

Agriculture Minister MK Anwar told The Daily Star that the cost of operating diesel-run pumps is 30 per cent higher compared to electricity-run ones.

His ministry had repeatedly put forward a proposal for subsidy on diesel amounting to Tk 381 crore to give the poor and marginal peasants somewhat relief from the rapidly increasing input costs and create a level playing field for farmers using power- run pumps and diesel-run pumps. But the finance ministry time and again turned down the proposal, saying the subsidy would be misused as diesel-run pumps are also used for operating mechanised boats.

The FAO-prepared ASR however strongly recommended subsidy to owners of diesel-run pumps at the rate of 20 percent of the cost of diesel, certified by the Department of Agriculture Extension (DAE) and also by local government bodies or irrigation groups.

"For increased coverage and relatively trouble free operations, all the irrigation pumps should be electrified on a priority basis, say, within a fixed time frame of 10 years with adequate insurance for uninterrupted supply. This is expected to reduce both fixed and operating cost by about 50 percent," the ASR says.

Sources at the agriculture ministry and the DAE pointed out that there is no policy directives as yet to convert all diesel-run pumps into power-run ones to reduce cost of farm production.

In the wake of an erratic fuel market situation resulting from the finance minister's recent hints at fuel price hike, energy advisor Mahmudur Rahman said withdrawal of Vat and other taxes on fuel import could benefit all stake holders.

Import cost of diesel is Tk 27 per litre but it sells at the officially fixed rate of Tk 30 a litre in the market. The price occasionally soars up to Tk 40-50 and even Tk 60 a litre. There is over Tk 7 tax and Vat on per litre of diesel, forcing Bangladesh Petroleum Corporation to incur losses.