Urea inventory hits record low in August

Wheat crop expected to bear brunt of shortage

Our Correspondent August 28, 2018
The previous recorded lowest inventory with the manufacturers had been in August 2013, which was around 0.1 million tons. PHOTO:FILE

LAHORE: The inventory of urea fertiliser has hit a record low, showing a shortfall in August, 2018.

According to data compiled by the National Fertilizer Development Centre (NFDC), the opening inventory of urea in August was estimated at 0.087 million tons, which is the lowest during Kharif 2018. With local production at 0.46 million tons, the total availability of urea in August stood at 0.547 million tons against offtake of 0.62 million tons in the same month of the previous year, a shortfall of 0.073 million tons.

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According to an assessment, a minimum 0.2 to 0.3 million tons of urea should be with manufacturers in order to cover the shortage.

August 2018 will be the first month in the last several years when availability of urea has seen a steep decline and recorded a deficit. The current level of urea availability does not bode well as far as supply is concerned in the upcoming Rabi season, starting from October.

The important wheat crop is sown in the Rabi season and the application of urea used to be at the highest level during that period. However, it is now feared that shortage of this crucial input could lead to a price hike and supply issues, resulting in a dent in the production of wheat.

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An official of NFDC, on the condition of anonymity, said that urea shortage has become a reality and the only solution is to start providing gas to local urea manufacturing plants. “Otherwise, we will see declining production, leading to price increase and lower supply,” he added.

Commenting on the situation, an industry insider said the latest official report showed that urea stock ending July 2018 registered at 0.087 million tons and there is negative stock in the month of August, which is very troublesome.

He added that the country’s urea stock reached its five-year low level. Citing an estimate, he said urea inventory with producers presently stands at less than 0.08 to 0.09 million tons which is lowest in the last five years.

The previous recorded lowest inventory with the manufacturers had been in August 2013, which was around 0.1 million tons.

The authorities are doing little to address the urea shortage by utilising the available idle plant capacity. Subsequently, it is a field day for dealers and traders who mint money by hoarding and black marketing fertiliser.

Provinces are also not playing their due role in pushing the government to raise supply through increased production. They are relying on registering FIRs against dealers, which does not address the core issue of shortage.

Ministry of Industries, under the Fertilizer Review Committee (FRC), formed a subcommittee, which gave its report recommending the functioning of closed urea plants, terming it a more economical and viable option than imports. Presently, the decision in this regard is pending with the ministry for final approval.

Published in The Express Tribune, August 28th, 2018.

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Vky | 3 years ago | Reply PML-N Govt. allowed Urea export at low prices, creating this shortage. Now the country has to pay dearly to import Urea back to higher prices. What a shame!
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