Growers lament as DAP subsidy limbo enters 4th month

KARACHI: Even after a lapse of over three months since the announcement of Rabi package, the government has not finalised a mechanism for the disbursal of subsidy to farmers for purchasing Di-Ammonium Phosphate (DAP) fertiliser, growers said on Friday.

To support the growth of agriculture sector and ensure sufficient crop output, the government had announced “Prime Minister Package for Rabi Crops-Specifically Wheat” in a bid to lower the price of DAP by Rs1,000/50 kg bag.

As per the plan, the federal government was to cover 70 percent of the subsidy, while the remaining share was to be borne by each provincial government. This targeted subsidy scheme was based on scratch cards to disburse the amount to farmers, who were required to register using their national identity cards. However, no relief has been passed on to the farmers as finalisation of the subsidy mechanism is still awaited.

“We were really looking forward to this subsidy to cut down DAP cost and increase crop yields,” a progressive farmer said while talking to The News.

“DAP is now selling at a 2.5 times premium to urea, which will affect the efforts to promote balanced use of fertilizers,” he said adding, “It is unfortunate that this well-intentioned program has so far been all words, little action”.

Meanwhile, the global prices of DAP have jumped 27 percent from $296/ton at the start of 2020 to $376 by the year end. As Pakistan imports an estimated 65 percent of its annual

DAP requirement of 2 million tons, the domestic local prices have marginally increased from Rs3,575/bag to Rs4,000/bag as well.

While the impact on local DAP prices has been much lower than global price changes, the import cost is likely to surge by around Rs500/bag due to short supplies in the international market.

Record imports by India and Brazil have pushed the current price in the range of $425 to $440/ton as shipments are already booked for January and February.

Despite the uptick in prices, DAP sales have continued to show strong performance in both global markets, including Pakistan.

According to industry estimates, total sales of DAP for the year are expected to grow around 7 percent to 2.17 million tons compared to last year. Similarly, urea sales for the year 2020 are also expected to be 5.95 million tons in line with the average of last five years.

Currently, urea is priced around Rs1,650/50 kg bag at 2012 levels. Another farmer said, “Dealers are already charging us Rs50 to Rs100 over the official urea rates.

Due to hoarding and overcharging, dealers have been able to benefit more than us from lower urea prices. Without this promised subsidy on DAP, the crop productivity of wheat and maize is likely to suffer setbacks.”

Stakeholders said the district administration had initiated action against dealers and traders involved in manipulating prices to take advantage of farmers’ willingness to pay more on the back of improved farm economics and better support pricing by the government.