Agriculturists, industry leaders fear urea import might not help farmers

Without considering the economic implications, the Economic Coordination Committee (ECC) of the cabinet has allowed the import of 200,000 tonnes of urea, which would cost national exchequer over Rs6 billion on account of subsidy, Profit learnt on Wednesday. Sources disclosed that the Ministry of Industries and Production (MoIP) at the behest of its Senior Minister Chaudhry Pervaiz Elahi suggested the Economic Coordination Committee (ECC) of the Cabinet to allow import of 200,000 tonnes of urea. Estimates show that the government would require about $108 million for fertiliser import and around Rs6 billion for subsidy to make urea prices affordable for farmers.
However, both agriculturists and industry leaders believe that urea import might not benefit farmers as profiteers are on money making spree due to absence of price control. They point out that the official price of urea fertiliser is hovering between Rs1,450 to Rs1,500 per 50-kilogram bag, while the commodity is being sold at Rs1,600 to Rs1,750 per bag. Speaking to Profit, Agri Forum Pakistan Chairman Muhammad Ibrahim Mughal said urea prices had witnessed a steep increase of Rs150 to Rs170 per bag – after suspension of gas supply to urea manufacturing plants – during the last couple of days. He underscored that if the government did not restore gas supply to fertiliser plants farmers would not be able to achieve Rabi crops targets.
He said farmers would require urea fertiliser in a week or two. If the commodity would not be available in markets its prices could swell further. Any drop in urea usage could easily reduce Rabi produce by 10-12 per cent, he estimated. On the other hand, industry representatives state that urea manufacturers have capacity to produce 6.9 million tonnes of urea fertiliser against the national requirement of 6.3 million tonnes. But curtailment of natural gas, which is the basic raw material of urea fertiliser, has compromised their capacity; otherwise domestic industry was in a position to exports around 600,000 tonnes of fertiliser. They also underscore that local industry is producing urea fertiliser at Rs1,480 per bag whereas the same is being imported at Rs2,970 per bag by the government through Trading Corporation of Pakistan (TCP). So far the government has allowed 0.9 million tonnes of urea imports, in which not only huge foreign exchange had been eaten away but also the viability of domestic industry had been threatened, they maintained. Industry leaders highlight that urea industry has 12-month gas supply agreements with Sui Northern Gas Pipelines Limited (SNGPL). They have second priority after residential consumers in Natural Gas Allocation Policy. They have court directives for uninterrupted gas supply. But nothing can help them get natural gas supply from gas utility companies, they lamented.