Fertiliser being sold to farmers at premium

The fertiliser industry has been instructed to increase urea supplies in the country by 30% to fulfill the requirement of farmers in the Rabi season. To gain an in depth knowledge of the current situation, The Express Tribune reached out to stakeholders of the fertiliser segment. Insight Securities analyst Muhammad Shahroz said that at present, farmers were being forced to stand in long queues to buy urea at a price that is Rs400-500 higher than the usual rate.

“A bag of urea should be available at around Rs1,800 but instead, it is being sold for Rs2,300.” Al Habib Capital Markets Analyst Sunny Kumar said that the closing inventory of urea for November was only 90,000 tons which was far less than buffer inventory level of around 200,000 tons. He stressed upon the government to ensure availability of gas in a bid to enable plants to operate at 100% capacity. “The dealers are also holding inventory while believing that prices will increase on account of an expected hike in gas rates and rise in international prices,” he said. “The domestic urea prices are nearly 80% lower than international prices.”

The annual demand of urea in Pakistan stands at around 6.3 million tons while fertiliser plants have the capacity to produce 7 million tons. Urea sales during the first 11 months of 2021 clocked at 5.7 million tons which is 11% higher than the same period last year. On the other hand, Sindh Abadgar Board (SAB) Senior Vice President Mahmood Nawaz Shah said that urea was a locally produced commodity unlike di-ammonium phosphate (DAP) that needs imported raw material.

He expressed concern that urea was being sold at Rs2,300-Rs2,600 in Sindh against company retail price of Rs1,750. He was of the view that dealers were involved in black marketing and hoarding of stocks.