Sales down 38pc to 463,000 tons

KARACHI: Fertiliser sales have declined 38 percent to 463,000 tons in August as farmers delayed building inventories on hopes of subsidy announcement by the government, industry sources said on Wednesday.
"Farmers did not build inventories as they are waiting for the subsidy," said Muhammad Azam, company secretary at Fauji Fertilizer Bin Qasim Limited.
In the middle of September, Prime Minister Nawaz Sharif has announced to establish a subsidy fund worth Rs20 billion for essential fertilisers at reduced rates. The fund is believed to bring down the prices of potassium and phosphate by Rs500/bag, it is learnt.
Naseem Akhter, a fertiliser dealer and a farmer at Naushehro Feroze district, said the increase in fertiliser prices by local manufacturers at Rs160/50kg bag in the recent past may be another factor of low sales.
"The situation on new pricing remains unclear as there is a talk in the markets that manufacturers would partially cut the prices," he said.
The sale of urea declined 32 percent to 429,000 tons in August, while sales of DAP dropped 72 percent to 34,000 tons, a local brokerage house quoted National Fertilizer Development Center figures.
Akhter said at present the dealers are selling urea at Rs1,925/bag and DAP at Rs3,750/bag in retail.
"I cannot say what would be the new price as dealers have not been provided information as how much subsidy would be provided on the fertilisers," he said. Farmers usually do not need fertilisers during the month of August as at this time seasonal crops such as cotton, sugarcane, rice and corn are ready for harvest.
They, however, build up inventories to be used in the winter crop of wheat, Akhtar said.
The crops of cotton and corn are being harvested and their harvests are almost completed in many parts of Sindh, while the crops of cane and rice are ready. "Cane would be harvested depending on resumption of sugar production at nearby mills," he said. The farmers will use fertilisers in November when they will cultivate wheat.
"We remain optimistic about growth in sales volume to be witnessed after the disbursement of Rs500 million subsidy by the government. However, the clarity on the latest increase in price per bag of Rs160 remains a deterrent for any anticipated uptick in volumes," Hamza Kamal at Shajar Capital said.
"However, with the accumulation of inventory to 394,000 tons along with the government pressure and the incentive of subsidy, we believe that a cut in price is likely."
In the last eight months, urea sales improved 1.9 percent to 3.7 million tons, while DAP sales fell 72 percent to 34,000 tons, the brokerage house added.