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Friday June 21, 2024

Urea price hike stands as government’s warning falls flat

By Israr Khan
May 09, 2024
A farmer disperses fertiliser in a rice paddy field on the outskirts of Lahore. — AFP/File
A farmer disperses fertiliser in a rice paddy field on the outskirts of Lahore. — AFP/File

ISLAMABAD: The government has failed to enforce a rollback of a unilateral urea price increase by fertilizer manufacturers, leaving farmers facing higher costs and potentially threatening agricultural productivity.

Despite warnings, manufacturers have refused to budge on the Rs550 per bag price hike, citing increased production costs.Last week, manufacturers requested a three-day grace period from the government to reconsider their pricing strategy. However, the deadline has passed without any action from the manufacturers to revise prices downward.

The failure to enforce a rollback follows the government's caution to fertilizer companies against the price increase, citing adverse effects on the agricultural sector.On April 30, manufacturers met with Federal Minister for Industries and Production Rana Tanveer Hussain and top officials of the Ministry of Industries and Production, seeking three days to reconsider the price hike. This was in response to the government's warning of intervention over a "unilateral" urea price-hike and its request for justification for the increase despite no corresponding rise in input costs. Manufacturers had raised urea prices by Rs550/bag.

Notably, on April 26, the government had warned of intervention over a “unilateral” urea price-hike by the manufacturers and asked for justification for the increase despite no corresponding rise in the input costs.

On Wednesday, Minister Hussain convened the Fertilizer Review Committee meeting with representatives from major fertilizer companies including Fauji Fertilizer Company Limited, Engro Fertilizer Company, Fatima Fertilizer Company, and Kisan Ittehad, alongside Federal Secretary of Industries and Production and Agriculture secretaries from all provinces.The minister emphasized the need for fertilizer companies to refrain from exploiting farmers and taking undue profit. He directed steps to ensure a uniform price of urea fertilizer across the country to ease the burden on farmers.He urged companies to voluntarily roll back the price hike, warning of government intervention to fix prices if they fail to do so.

The minister cited a report from the Competition Commission of Pakistan (CCP) highlighting substantial profit margins for fertilizer companies compared to production costs. He stressed the need for these companies to pass on benefits to farmers.The meeting proposed uniform pricing for urea from all fertilizer companies and dealers, with Minister Hussain reaffirming the government's decision to conduct third-party audits to determine production costs and profit margins.

Additionally, on the recommendation of the Ministry of Industries and Production, the Economic Coordination Committee (ECC) on May 7 (Tuesday) approved the proposal for the import of 200,000 metric tons of urea to meet the requirements for Kharif 2024.