Fertiliser price spike

It appears commodity speculators are doing their darnedest to worsen the food inflation crisis, as new reports suggest they are hoarding fertiliser to such an astounding extent that average prices in Pakistan have moved completely inversely to international prices. International urea prices have dropped 25% over the last year, while diammonium phosphate prices are down 49% in the last year. Earlier this year, experts also endorsed the supply line, saying Pakistan would have sufficient fertiliser available for the rest of the year. Yet average fertiliser prices in the local market have doubled in the same time period. Even if we account for the devaluation of the rupee, which lost almost 35% against the dollar in the year since last August, the numbers don’t add up.

Pakistan has produced 3.7 million tonnes of fertiliser so far this year and has reserves of about 175,000 tonnes against the projected annual requirement of 6.5 million tonnes. Government and independent projections said total output for the year would easily cross the 2.7 million tonnes needed to reach the target, and the government has also allowed the import of 600,000 tonnes to ensure there is sufficient surplus available to avoid shortages and control prices. Yet, experts are projecting shortages of “200,000 to 800,000 tonnes”, meaning that supply is nonexistent in certain areas. But while hoarders and commodity speculators may be the primary causes, the government’s failure to regulate supply and instead trust the market to operate transparently is shocking. Keep in mind, successive governments have seen what sugar and wheat mafias can do if given even a little space.

Fertiliser, as part of the food supply chain in a food-insecure nation, should be heavily regulated to ensure that shortages do not cause inflation due to higher input costs or lower food output.

Published in The Express Tribune, August 15^th, 2023.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.