Urea prices skyrocket

Successful governments in Pakistan always try to find out political solutions to economic issues. Alarmingly high urea price spiral also indicates the same problem as both the federal and provincial governments are blaming each other, while urea prices have skyrocketed due to heavy profiteering.
Despite the fact that Pakistan has a world class urea manufacturing infrastructure and surplus production capacity, the country is facing acute urea shortage that has pushed its prices up to Rs1,800 per bag. But the irony of the situation is that governments, politicians, industry and urea dealers are still blaming each other.
On numerous occasions, Punjab government has shifted urea shortage responsibility to Islamabad, but it never tried to evolve a fool-proof price control system. Senior provincial leadership is merely trying to settle its score with the federal government by giving press statements, while hoarders are on a money minting spree. On the other hand, urea manufacturers are crying against natural gas curtailment. They point out that they have uninterrupted natural gas supply agreements for 12 months and have the first priority after domestic and commercial consumers. But their supply is being curtailed by the gas utility companies. Even a number of court judgments could not provide them relief due to various political reasons, they underline.
Speaking to Profit, an unnamed official of a urea company stressed that the country would face an acute urea shortage during this Rabi season mainly because of mismanagement at the part of government and gas utility companies. “Manufactures cannot be blamed for the urea price increase. The government’s ad-hoc policies are responsible for this crisis. Industry had gradually increased urea prices by Rs750 per bag in 32 years, but nobody is willing to understand why the industry has to increase urea prices by Rs900 per bag in just 24 months, he questioned.
Answering a query, he said urea producers had vast dealers network, mainly in rural areas, which made it virtually impossible for the industry to ensure price stability. He also shifted the burden on the government by avoiding the question that industry was equally responsible in profiteering in urea sales as it did not mention retail price on fertiliser bags.
Trading Corporation of Pakistan (TCP) is another player in the market, which has the responsibility to ensure availability of essential commodities at reasonable price. It has been assigned to intervene in the market if prices of some essential commodities swell in extraordinary manner. But, on every instance, it reacts too late. In the present urea shortage, the state machinery has shown the similar attitude again. Industry has been warning for last three months that in the Rabi season the country may face a urea shortage of some 1.4 million tonnes, but nobody has taken any action. Now when the crisis-like situation has been created, and farmers are protesting against unprecedented price hike, the government has opened tenders for urea import. In the whole mess, farmers, especially peasants, are being affected badly. Rural economy in the country is mainly running on credit. Farmers procure seeds, fertilisers and pesticides from agents and dealers on credit, who exploit the situation and charge exorbitant rates as there is no effective price control system in place.
It is interesting to note here that the country has 6.9 million tonnes installed capacity of urea fertiliser against the national requirement of 6.3 million tons. Urea is a major fertiliser used in Pakistan, owing to its high nitrogen content of around 46 per cent. Figures indicate that some 90 per cent fertiliser requirements were met through urea in 2010, while the rest were fulfilled through di-ammonium phosphate (DAP) and other types of fertilisers.
Kisan Board Pakistan (KBP) has warned the government about launching a country-wide protest movement against the government if demand of the growers ensuring availability of fertilisers is not met forthwith.
This warning issued by the KBP District branches heads, while leading the protest demonstrations arranged by the board, on Friday, throughout the country to press the government for ensuring availability of fertilisers at control price. According to the KBP Central Secretary Information Haji Muhammad Ramzan demonstrations were especially held in South of Punjab and Sindh against shortage of fertiliser and its black marketing. These demonstrations were held on the call of KBP Central President Sardar Zafar Hussein in Multan, Dera Ghazi Khan, Rajanpur, Jampur, Muzaffargarh, Layyah, Vehari and other districts. While in Sindh, these demonstrations were held in Ghotki, Jacoabad, Kashmor, Sukkur, Larkana, Shikarpur and Naushehro Feroze, Ramzan added. Speakers addressing the demonstrators condemned the anti-grower policies of the present government and urged that fertilisers should be made available at the earliest and prices of the agricultural commodities should be fixed a fresh. ‘Growers are unable to even recover their input cost due to increasing prices of fertiliser, pesticides and other agricultural inputs,’ they alleged.
They warned the government of a protest movement after Eid if their demands are not met.