Urea shortage looms ahead of Rabi season

LAHORE: Pakistan is facing a critical shortage of urea fertilizer that could affect wheat production and food security in the country, as natural gas supply to fertilizer plants is expected to be cut from next month, industry sources and farmers said on Wednesday.

The gap between fertilizer production and consumption has widened to critical levels, raising fears of a urea shortfall of up to 500,000 tonnes during the upcoming Rabi season, especially between the critical period of October 2023 and March 2024, when wheat and other crops are sown.

“The shortfall of fertilizer is expected to worsen in the coming months as natural gas supply to fertilizer plants is said to be curtailed from October 15,” an industry official said. “The urea deficit is already posing a serious challenge to national food security, and has taken a heavy toll on farmers due to squeezed supplies and price hikes.”

The market has also begun to see price distortions. Currently, the industry is providing urea at Rs3,107, Rs3,309, and Rs3,323 per bag. However, the middleman is selling it at over Rs4,100 per bag.

Farmers are being exploited by middlemen, who are charging them profits of Rs1,000 to Rs800 per bag above the minimum retail price. “This manipulation could force farmers to pay an additional Rs100 billion on fertilizer purchases in 2023, based on excessive pricing on the country's annual consumption of 6.8 million tonnes,” the official added.

Farmers need assurance of urea supply at uniform, reasonable, and notified prices across the country. It is understood that the different prices of urea are due to the fact that natural gas is being supplied to the manufacturing units at different prices. Supplying the same gas price to all companies will ensure a single price of urea across the country.

The shortage of urea arises when gas supply is reduced to fertilizer manufacturers. Full-year operations are required to bridge the demand and supply gap, which will also reduce hoarding and black marketing of urea. According to the National Fertilizer Development Center (NFDC) projections, total urea availability as of October 1, 2023, is expected to be only 69,000 tonnes, compared to 294,000 tonnes during the same period last year. During the last Rabi season, around 300,000 tonnes of urea was imported, but no plan has been set by the government to meet the critical requirement of farm nutrients for this season.

Commenting on the severe shortage of urea fertilizer, the Pakistan Kisan Ittehad has stressed the need for urgent measures to avert exorbitant urea prices, its black marketing, and shortage. The government should keep all urea plants running throughout the Rabi season by allocating gas to the manufacturing plants.

In addition, the government should also take immediate steps to import at least 500,000 tonnes of urea and ensure its arrival in November 2023 to avoid a shortage during the peak Rabi demand period, provided that all urea manufacturing units are operating simultaneously.

The PKI also emphasized the need for a buffer stock of around 200,000 tonnes of urea to keep prices in check. The farmers' organization also called on the authorities to take concrete steps to stop the smuggling of fertilizer through the Western borders.

Talking about the concerns of consumers as well as ensuring food security, the PKI asked the policymakers to take the urea shortage seriously as it is directly related to wheat production in the country. Without proper application of fertilizer, ample production of wheat would remain a dream, the PKI concluded.