Urea prices rise Rs420/bag since July last year

LAHORE: Fertiliser manufacturers have increased urea prices by more than Rs400/bag since July last year with the market leader Fauji Fertilizer Company (FFC) having pushed up prices three times during the period, in a sheer contrast to the government’s plan to give relief to farmers.

Industry estimates showed on Thursday that urea price was raised by more than 200/bag to Rs1,617/bag in July 2018. Another push was in October last year when its price was further increased Rs123 to Rs1,740/bag. The latest increase of Rs80 was by FFC that brought a bag price up to Rs1,820/bag. Thus, within first year of the government urea fertiliser price was actually increased Rs 420/bag.

Agriculture experts said higher urea prices would adversely affect the profitability of the framers as urea is one of the major inputs for all major and minor crops.

FFC, the largest urea maker, made a whopping increase of Rs80/bag in urea price at a time when Prime Minister Imran Khan approved Rs278 billion National Agriculture Emergency Program to boost the profitability of farmers.

Other industry players, including Engro Fertilizer, Fatima fertilizer, and Agritech follow the industry’s leader footprints in the pricing. “So it is expected that other urea producers will also increase prices following the FFC at the start of the kharif (summer) season,” an expert said. Rabi (winter) crops are reaching an end and urea fertiliser intake for them have minimised.

FFC’s official said urea price is still lower than the 2016 level and attributed the increases to growing cost of production. Prices increase in accordance with demand and supply mechanism, he added.

Contrary to his claim, urea price in 2016 stood at Rs1,790/bag and that was lowered by the then government to Rs1,400/bag through subsidy and waiving off of general sales tax. FFC increased urea price to Rs1,820 per, Rs30/bag higher than the 2016 price.

An official of the Punjab Agriculture Department said the framers have already paid almost Rs15 billion extra to the fertiliser producers as urea price increased to Rs1,820/bag from Rs1,400/bag. Framers in the province are expected to pay approximately Rs25 billion extra to urea fertiliser producers in the wake of price surge, the official added.

Total demand of urea fertiliser for summer and winter crops is estimated at 3.3 million tons. Fertiliser production’s annual capacity stands at over six million.

Malik Nauman, provincial minister for agriculture said a federal price control committee determines urea prices and keeps monitoring price movement.

The committee comprises officials from ministries of industries and production, finance and national food security and research.

Nauman said the government has started subsidising fertiliser. The federal committee permitted increase in urea prices, he added.

The government provided a subsidy of Rs1,143/bag on 100,000 tons of imported urea supplied to winter crops. The two plants were also reconnected with Sui Northern Gas Pipelines Limited to increase domestic urea production.