Urea makers fear decline in food production

Say weak urea demand can reduce wheat output, increase flour prices.

LAHORE:

Weakening demand for fertiliser can lead to a decline in production of major food crops as well as increase in prices of some key food products, causing food insecurity for 185 million people in the country, say fertiliser manufacturers.

Fertiliser consumption, which had touched 6.5 million tons in 2009, dropped to 5.3 million tons in 2012-13, signalling lower demand because of shortage and higher prices after imposition of general sales tax, gas infrastructure development cess and gas outages for four fertiliser plants with production capacity of 2.3 million tons, they say.

According to them, urea contributes around 25% to the crop yield and its unavailability can result in at least 40kg less wheat production per acre. This will also lead to an increase in the price of flour.

“Tackling power crisis is indeed the need of the hour but we must not forget the all-important agriculture sector, which is the backbone of the economy as well as provide raw material for export-based industries,” said Shahab Khawaja, Executive Director of Fertilizer Manufacturers Pakistan Advisory Council, while talking to a group of journalists.



As the new government was serious about attracting investment, he suggested that it should protect domestic industries to give a positive signal to foreign investors.

He claimed that the fertiliser industry had invested $2.3 billion in the past five years with the help of foreign financial institutions and was able to meet urea needs of the entire country.

“Our economic condition doesn’t allow us to spend approximately Rs452 billion on urea imports while our country is self-sufficient and we can even export our additional production,” he said.

At present, Pakistan has the capacity to produce 6.9 million tons of urea – the seventh biggest producer in the world.

Asking the government to provide gas as a priority to the fertiliser industry that makes value addition, Khawaja said fertiliser plants did not steal and waste gas and never defaulted on payments to gas distributors.

“If we permanently shut down our plants, the national exchequer will also be deprived of Rs28 billion in taxes annually as the industry,” he said.

Published in The Express Tribune, July 30^th, 2013.

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