Freight charges: Fertiliser import cost to be passed on to farmers

Federal govt caves in to importers’ demand, provinces have yet to agree

ISLAMABAD: Fertiliser importers on Friday contested the government’s decision in the federal budget to provide a 50kg bag of di-ammonium phosphate (DAP) fertiliser for Rs2,500 and forced the government to pass the freight charge on to the farmers.

In this regard, a new formula has emerged between the fertiliser importers and the government after the former refused to bear freight charges on the imported DAP.



A two-day meeting in this regard concluded on Friday with a new agreement that the freight charge ranging from Rs55 to Rs180 would also be added to the subsidised Rs2,500 per bag price for DAP.

The meeting concluded once the government bowed to the demand of the fertiliser importers, who contended that they could provide a 50kg bag of imported DAP for Rs2,500 only in Karachi and from Karachi onwards the freight charge would have to be borne by the farmers themselves as per their distance.



The meeting was attended by representatives of the finance ministry, Ministry of National Food Security and Research, Ministry of Industries and Production and fertiliser importers.

Splinter

However,  there was no representation from the provincial governments as Punjab had already objected to the proposal and announced that it would not buy any DAP bag for more than Rs2,500 as agreed in the federal budget.

Punjab is the largest consumer of fertiliser and the subsidy share is to be equally shared by the federal and provincial governments.

One of the participants of the meeting feared that although a formula had been agreed, in the absence of provincial government representatives, a deadlock could emerge from the objection of the provinces.



He said it was likely that the provincial authorities would take action against the shifting of freight charges to the farmers.

“We agreed on ex-Karachi price of Rs2,500 and freight will not be the responsibility of the importers,” said the importer.

The participants said the importers had argued that they could not fix the price of any imported commodity since it was an international cost and the dollar rate frequently fluctuated. The importers further warned that a disagreement with the provinces could affect the sowing season of Rabi crops.

However, the fertiliser importers and manufacturers agreed to provide urea at Rs1,400 per 50kg bag fixed by the federal government in the budget since 90% of the urea was manufactured domestically and there existed a possibility to fix the price.

Published in The Express Tribune, July 23^rd, 2016.

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