Urea, DAP off-take plummets by 37pc, 65pc in July

By Munawar Hasan
August 12, 2022

LAHORE: A massive decline in off-take of farmer nutrients has set off alarm bells both for farming community and fertiliser industry.

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According to latest projections, July 2022 urea and DAP off-take would decline by 37 percent and 65 percent year-on-year.

Provisional data for July 2022 projects urea sales at 390,000 tonnes, down 37 percent YoY, stated Muhammad Waqas Ghani of JS Research.

For the month under review, Fauji Fertilizer (FFC) is expected to post urea sales volume of 147,000 tonnes followed by Engro Fertilizer (EFERT) off-take of 88,000 tonnes, whereas Fauji Fertilizer Bin Qasim's (FFBL) sales would likely clock in at 23,000 tonnes.

Cumulative off-take for the seven months of calendar year 2022 have been anticipated at 3.6 million tonnes compared to 3.5 million tonnes in the same period last year, reflecting a 3 percent YoY growth. Sales are expected to decline primarily due to lower production owing to breakdown in FFC (Goth Machhi) and EFERT's (Enven) plants in July. Assuming urea production of approximately 425,000 tonnes for the month, urea's closing inventory comes to around 290,000 tonnes for July 2022.

On the other hand, DAP off-take for July is likely to clock in at 68,000 tonnes versus 193,000 tonnes in the same period last year, depicting a 65 percent YoY dip. This was likely due to lower demand of the product coupled with higher prices in the local market owing to restricted supply globally.

On the price side, the recent hike of Rs350/urea bag took the total price of a bag to Rs2,200. However, dealer margins were unchanged, which has not led to dealers demanding an upward revision in margins.

“A potential strike by dealers may result in difficulties,” Ghani concluded.

The extremely low usage of both major fertilisers might dent production of strategic cotton crop besides adversely affecting output of other Kharif crops. Incessant rains in addition to floods have badly impacted farming activities, which is one of the major reasons of low application of chemical fertilisers.

On top of that, said Farooq Bajwa, a progressive farmer, non-availability of urea fertiliser on prescribed rates plus short supply in the market have been attributed to least interest shown by the farmers in using otherwise most sought-after farm compost.

Similar is with the case of DAP, which has become costlier to the extent that most of the small or medium scale farmers simply could not afford to apply it on crops. “One of the major reasons of low fertiliser off-take could be low demand by ravaged cotton growers, who have been demoralised to the extent that they do not see any reason to invest on the standing crop which is under intense stress due to flooding in many parts of the country,” Bajwa observed.

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