Engro seeks cut in fertiliser subsidies

Says higher crop prices have jacked up farmers income.

KARACHI: Engro Corporation has called on the government to cut subsidies of the fertiliser sector, saying end users and beneficiaries of subsidies are now in a better condition owing to an increase in agriculture incomes.

Speaking to the media on Tuesday, Engro Corporation Chief Financial Officer Ruhail Mohammad said that fertiliser subsidies should be removed now, as they would not make much difference for farmers, who are earning more than they did in previous years.

Prices of wheat, sugar and cotton have increased sharply in recent times, resulting in a rise in farmer income, due to which they could now afford urea at market rates.

Mohammad added that the government will give Rs37 billion as fertiliser subsidy in 2011 and could potentially reduce the fiscal deficit by restricting the subsidy.

Talking about Engro’s plans for the future, he said that with the acquisition of Al Safa Halal, Engro is launching an international food venture with a company that has a big distribution network in the United States. The company also has plans for listing Engro Foods and Engro Fertiliser in domestic bourses this year.

Engro Corp’s Olpers milk achieved a market share of 39 per cent in 2010, while in the ice cream segment, Omore increased its market share to 17 per cent.

Responding to a question about the Thar coal project, he said its economic viability could be completely evaluated after the Government of Sindh completed infrastructure development, which it has promised to do in two years.

Mohammad explained that power generation from Thar coal could only begin after 2016, as mining and setting up of power plants is likely to take four years after infrastructure development. He added that it could take even longer if the government was unable to improve infrastructure in the set timeframe.

Published in The Express Tribune, February 16^th, 2011.