Business

Govt reduces urea prices by Rs 70 per bag

April 27, 2016

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Farmers cast urea fertilizer in a rice plantation on the expropriated and now redistributed farm of El Charcote in the central state of Cojedes October 14, 2010. El Charcote became a symbol of Chavez's socialist revolution when he sent soldiers to seize it in a 2005 push to break up major ranches and repopulate rural areas largely abandoned since Venezuela's oil industry took off in the 1920s. The government recently bought the last 500,000 acres (200,000 hectares) of land on the farm, a vast cattle ranch that until 2005 belonged to one of Britain's wealthiest families, the Vesteys, and 130,000 cattle, part of a new drive by Chavez to increase state control of food in South America's top oil producer. Picture taken October 14, 2010. REUTERS/Carlos Garcia Rawlins (VENEZUELA - Tags: POLITICS ENVIRONMENT AGRICULTURE)

The government on Wednesday directed the fertilizer industry to immediately announce reduction of Rs 70 per bag of urea, however an official source said that the actual price reduction should have been Rs 250 per bag.

The source said that urea manufactures have earned Rs 30 billion profit this year from farmers. They were allowed windfall profit even though the state owned National Fertilizer Marketing Limited had imported urea at very less price.

Despite a glut in the market urea was sold at high price of Rs 1900 per bag. If NFML was allowed to sell its imported urea at the procure prices then the price of would have declined to Rs 1500 per bag.

The landed cost of urea in September 2015 was Rs 1490 per bag. The total urea off take during Rabi 2015-16 declined by 413,000 tons due to higher prices. In October 2015, urea off-take was 197,000 tons against projected 400,000 tons whereas in November actual off-take was 623,000 against projected 500,000 tons. In December 2015, actual off take was recorded at 839,000 tons against projected 800,000 tons. In January and February 2016, actual off-take was 348,000 tons and 280,000 tons against projected 550,000 tons and 450,000 tons respectively.

An official statement said the Finance Minister Ishaq Dar chaired a meeting today to take stock of Fertilizer off take and prices in the country. The meeting was attended by the Federal Minister for Petroleum, the concerned federal secretaries and the representatives of fertilizer industry led by Managing Director Fauji Fertilizer Company.