After urea price hike, farmers to bear extra Rs30b cost

Subsidy withdrawal and inventory fall blamed for rise in fertiliser prices

LAHORE: A recent surge in prices of fertilisers will force farmers to bear an additional cost of around Rs30 billion per annum, which will eat into their income from crop harvests, say agriculture experts.

Urea’s market price has now settled at Rs1,600 per bag across the country, a rise of Rs200-Rs250 compared to late 2017 when prices stood around Rs1,300 per bag.

Experts estimate annual impact of the price revision at around Rs30 billion on the farmers, which rely on fertilisers to reap a good harvest.

Farooq Bajwa of the Farmers Associates Pakistan blamed fertiliser manufacturers for what he called an unreasonable increase.

“We are paying Rs1,650 per bag for urea in Bahawalpur district whereas di-ammonium phosphate (DAP) fertiliser is being sold for Rs3,300 per bag, which is too high for the farmers,” he said.



“Now, the farmers instead of applying DAP are preferring nitrogen, phosphorous and potassium (NPK) fertiliser, which is a better alternative during days of water scarcity as it does not require immediate irrigation,” he said, lamenting that the caretaker government had no interest in checking the price hike.

Urea supply is estimated at around 3.12 million tons in Kharif 2018 comprising 0.38 million tons of leftover stock and fresh production of 2.74 million tons. Its demand is projected at around 2.81 tons, leaving 302,000 tons in reserves for the next season.

In the case of DAP, the Kharif 2018 season started with a stock of 190,000 tons. Domestic production during the season is estimated at 381,000 tons and imports at 345,000 tons. Total availability will be around 916,000 tons compared to estimated demand for around 720,000 tons. This will leave a buffer stock of 199,000 tons at the end of the season.



A federal government official, on condition of anonymity, said average urea price in the entire country stood at Rs1,500 per bag on June 13, 2018 compared to Rs1,300 in November 2017, an increase of Rs200 or 15%.

He clarified that since fertiliser was a deregulated commodity, there was no check on its price hike. “Government does monitor prices of fertilisers, but has no mechanism to keep them at a certain level,” he said.

He cited the withdrawal of subsidy and reduced supplies as significant factors that contributed to the price surge. Fertiliser plants have fewer inventories and some plants have been closed.

An official of the National Fertilizer Development Centre (NFDC) conceded that urea prices had been jacked up to Rs1,550-Rs1,600 per bag, a steep rise from Rs1,250 in October and November 2017. Imported urea was being sold at Rs1,000 per bag at that time, he said.

Fertilizer Manufacturers of Pakistan Advisory Council spokesman dismissed the perception that urea price had been climbing continuously. He recalled that urea price had been reduced to Rs1,400 from Rs1,790 in June 2016 whereas it was sold at around Rs1,200 to Rs1,290 during 2016-17. 

Published in The Express Tribune, June 21^st, 2018.

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