High DAP cost may hit wheat crop
The meeting was informed that a govt-to-govt deal with Russia was expected to be finalised in July for import of one million tons of wheat. Photo: file
Expressing their concern over an extraordinary rise in prices of di-ammonium phosphate (DAP), the farming community has warned that the high cost may prove to be a disaster for wheat crop during the upcoming Rabi sowing season.
“DAP fertiliser prices currently stand at around Rs14,800 per 50kg bag compared to around Rs6,000 per bag a year ago,” said a progressive farmer from Punjab, Ahsan Ghaffar.
“Such high prices are not affordable for a majority of farmers, already battling acute poverty these days. It is feared that the expensive input may reduce its consumption and application on crops.”
It would have a devastating impact on the staple wheat crop in the upcoming Rabi sowing season, Ghaffar added.
As per official figures, DAP offtake in the first six months of 2022 came in at 600,000 tons against 768,000 tons in the same period of 2021 and 851,000 tons in the first six months of 2020.
Total DAP production in January-June of 2022 stood at 520,000 tons, whereas DAP stocks in July were recorded at 352,000 tons against 428,000 tons and 450,000 tons in the same month in 2021 and 2020 respectively.
The country imported only 222,000 tons of DAP in January-June 2022 versus import of 725,000 tons in 2021 and 378,000 tons in 2020.
“The government should reduce the price of DAP by Rs8,000 per bag and immediately import at least 50 million bags,” suggested Dr Ibrahim Mughal, Chairman Agri Forum Pakistan.
Similarly, the price of urea should be brought down by Rs2,100 per bag, he said.
“With the reduction in urea prices, the government should direct fertiliser companies to produce at least 130 million bags of urea to stave off the shortage. It should also divert gas supplies to fertiliser plants by simultaneously increasing the gas tariff by at least three times for such plants,” Mughal recommended.
Pakistan Kisan Ittehad (PKI) President Khalid Khokhar said that the expected shortage of DAP for wheat crop was likely to emerge in September due to low imports.
“Lower application of DAP by farmers to the upcoming wheat crop will reduce the harvest by at least 20%, or around 5.4 million tons,” he feared, adding that import of an additional 5.4 million tons of wheat would require $3 billion.
This import will be in addition to the 3 million tons of wheat already being imported.
The PKI president was of the view that to avert the potential crisis, the government should give subsidy directly to the farmers for increasing the use of DAP, and the subsidy should be at least 50% of DAP price.
“International DAP prices have started falling; we should take advantage of the decreasing prices and import more fertiliser. Only around 35% of the DAP requirement can be produced locally due to the capacity limitation of fertiliser plants, the rest of 65% is imported,” he added.
Furthermore, the government may consider reducing taxes by 3.5% at the import stage and withholding tax to 0.5% to further lower the prices of DAP.
“Direct subsidy on DAP for farmers and reduction in import taxes is a very small price that can save $3 billion of foreign exchange on wheat import. The government must support farmers instead of importing wheat from other countries,” Khokhar emphasised.
Published in The Express Tribune, August 7th, 2022.
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