Fertilizer producers, importers refuse to print price on bags

Give alternative proposals to solve issue

ISLAMABAD: Fertiliser manufacturers and importers have refused to accept the government’s proposal to print the price of di-ammonium phosphate (DAP) on bags to settle the issue of the Rs14-billion subsidy on the DAP announced during the 2014-15 budget.

The stakeholders, however, have provided their own solutions to the issue at hand. Earlier, in a bid to support farmers, the federal government announced the subsidy of which 50% was to be contributed by respective provinces.

However, the government’s plan of action has remained redundant even after six months of the announcement due to manufacturers and importers’ refusal of printing the price on DAP bags.

At least four meetings between government officials and the stakeholders have been held, with specifically the Punjab province insisting on printing the prices.

Manufacturers and importers argue that price fluctuation in the international market as well as inland freight charges are reasons for not printing the specific price for a stock commodity.

Array of proposals

The government had also proposed a direct cost reduction per bag of DAP and equivalent for other similar fertilisers/raw material on basis of nutrients through General Sales Tax reduction. This reduction was planned to be introduced in the input stage as well as the output stage – through GST invoices.

Another proposal of the government was the establishment of an escrow account with the National Bank of Pakistan (NBP). All stakeholders were to deposit their contributions to Rs14 billion in the account, which can be authorised through SROs to pay subsidy to respective companies within 30 days of claim without any recourse to the government.

Under this idea, producers and importers are required to submit claims along with relevant documents in order to create an equal playing field for all local stakeholders handling phosphatic fertilisers.

However, a six-member committee constituted by the government comprises of two representatives from each local manufacturers, importers and dealers to develop recommendations. The committee finalised proposals including alternative for price printing and mechanism for direct long-term subsidy to farmers.

These proposals include complete removal of GST on input and output (including gas used for local manufacturing) on all phosphatic fertilisers.

The price printing alternative includes communication to farmers through newspapers by each company at every change in price and once a month during each season – Kharif and Rabi.

Secondly, all companies will display an updated price list at their field warehouses and fertiliser companies will issue message alerts of prevailing prices to the farmers, on their mailing lists and any subsequent changes in price during season.

Published in The Express Tribune, January 10^th, 2015.

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