Govt flags urea price concerns in Rabi season

ISLAMABAD: The government on Monday flagged concerns about a weak fertiliser demand during the current winter crops season in response to a rise in local prices, warning of an action against profiteers following an antitrust body’s probe into an alleged cartel practices impacting pricing.

A government statement said Makhdoom Khusro Bakhtiar, minister for National Food Security and Research “expressed his concern over reduced off take of urea and its high prices during current Rabi 2019-20 compared with previous Rabi season”.

According to the industry data fertiliser sales fell nine percent year-on-year to 679,000 tons in September as there was a double-digit dip in urea consumption on price hike. The National Fertilizer Development Centre’s data showed that urea sales declined 16 percent year-on-year to 405,000 tons in September. Urea sale volume stood at 482,000 tons in the corresponding month a year earlier.

The minister was briefed on fertilizer issues at a consultative meeting. “The minister showed his satisfaction regarding available stock of urea and DAP (diammonium phosphate) for Rabi season 2019-20… he was much concerned about gradual increase in prices of DAP despite decline in prices in international market and profit margin on import of DAP,” the statement added.

The statement said the minister discussed cost of domestic urea and “undue profiteering by urea manufacturing companies”. “A detailed discussion was held on the issue of high profit by urea manufacturers.”

It was also pointed out at the meeting that gas infrastructure development cess (GIDC) is being collected from farmers “but it is not paid to national exchequer”.

National Assembly Special Committee on agricultural products has assigned a task of evaluation of profit margin of various fertilizer products, especially urea and DAP to the Competition Commission of Pakistan (CCP).

“In the next meeting of the committee, the CCP will present its findings,” the statement added. A cabinet committee on fertilizer is also constituted under the chairmanship of planning minister, “which will also look into the high profitability and high prices of both urea and DAP”, the statement said.