The ongoing urea shortage and its black marketing may cause an accumulative loss of Rs150 billion to the farmers both in Kharif and Rabi seasons, said Khalid Mir Vice-President Engro Fertilisers.
In the wake of reduced gas supply to the fertiliser manufacturing units, the farmers may face an acute shortage in Rabi season, which will adversely affect the wheat production posing serious food security concerns for the country, he said, adding the government should import at least one million tonnes urea to overcome an anticipated shortage.
While talking to journalists, Mir said around 3.25 millions tonnes of urea is needed for the Rabi season and it is mostly consumed during the month of November and December.
It is estimated that the government has to import one million tonnes of urea to meet the domestic requirements; hence, orders of urea imports for Rabi would have to be placed forthwith. “We might need one normal vessel loaded with urea after every five days in the month of September to meet the fertiliser requirement in the months of November and December. Around 900,000 million tonnes of urea is needed in December alone,” he added.
Khalid Mir said that there are nine factories producing urea and their production capacity is 6.9 million tonnes while the domestic requirement is 6.3-6.4 million tonnes, thus the country he said is not only self-sufficient but can produce surplus urea only if gas is provided smoothly. However, with the current gas curtailment policy, it is estimated that these factories could only produce around 5 million tonnes during the year thus creating the need of importing around 1-1.5 million tonnes of urea.
He said that Kharif season will end by September 30th and during this season farmers would face acute shortage of urea due to gas curtailment policy besides paying higher prices. “Farmers had to pay Rs300-400 per bag higher than the factory prices,” he added.
He warned that inventory might be equal to zero in the month of August and farmers might be facing more hardships during the Rabi season. Total requirement of Rabi season is around 3.25 million tonnes and the government has to import one million tonnes. He said that December requires 900,000 tonnes while domestic manufacturers might produce only 300,000 to 400,000 tonnes. Four to five per cent reduction in urea usage means loss of billions of rupees to the growers in terms of reduction in per acre yield.
Khalid Mir claimed that farmers have to bear Rs150 billion loss during the current year (in both Khareef and Rabi seasons). He said that they had written a letter to the government on August 10th to make immediate arrangements for import of urea to meet the shortfall. He said that this import should be completed by October-November and they are also meeting different farmers associations to raise voice in this regard.
However, he said that the country needs $500-600 million to import this quantity of urea and that fertiliser would cost Rs2900 per bag on landing. While the present price of domestically produced fertiliser is Rs1378 per bag. So the government would have to give a subsidy of Rs1500 per bag which means a total subsidy of Rs30 billion, Mir predicted.
Nevertheless, Mir warned that there would be no use of importing fertiliser if delayed.
He said that the proposal should be floated in the next ECC meeting. “We need an inventory of 600,000 tonnes at the opening of Rabi season or will have to face shortage of production which might pose a serious food security concern.”
Replying to a question, he said if gas is fully restored to the local manufacturing units, then the shortage could be overcome by 80 per cent. However, he said it would be more beneficial for the government as it would neither have to spend precious foreign exchange on imports of fertiliser nor will it have to give huge subsidy on urea bags. He said that the first and foremost priority should be to ensure availability of urea to save staple food and wheat.
