MULTAN,March 30th: Prices of all kind of fertilizers increased by 10 20 percent in the markets of Southern Punjab following the imposition of General Sales Tax on agriculture inputs the DAP prices have jumped by Rs779 to Rs 4,059 per bag while the rates of urea have skyrocketed by Rs110 to Rs1,150 per bag, according to survey carried by this scribe on Wednesday.Market sources told that before the imposition of 17 percent GST on agri inputs the urea was available in the market at Rs1,040 per bag while the DAP was being sold for Rs3,280 per bag at retail level.They said that different companies have fixed different rates for their fertilizer products, however the raise in the rate after the calculation of new tax would mount to Rs800 per bag for DAP while for urea it would be Rs135 per bag.For instance the FFBL have raised the DAP rate to Rs4,069 per bag after imposing new tax, they said. It is to be noted that just one month before the imposition of the new tax, the fertilizers companies have raised the prices of DAP by Rs 100 per bag to Rs 3280 from Rs 3180 without any rise of rate in the global market, putting the additional burden of over Rs 2 billion on farmers, as around 15 million bags of DAP will be utilized in kharif season. According to industry sources, now dealers will sell the DAP bag for Rs 4100 from the earlier rate of Rs 3280 per bag.Retailers said that Engro had already incorporated this hike last week. They believe this hike in DAP prices to be detrimental for DAP sales despite higher farmer income. Thus, other cheaper substitutes of DAP like NP could see their sales boosting post this price-hike. Urea on the other hand, remains inelastic and we foresee strong offtake numbers in the months to follow.
With regards to major fertilizer manufacturers, FFC’s and Engro’s urea offtake declined by 2 percent and 9 percent, respectively in February. FFBL’s offtake on the other hand, rose by 69 percent to 27k tons during the same period. Bilal Qamar, a fertilizer sector expert, said that this was mainly due to an early turnaround this year owing to gas load management by the government.While urea demand remains relatively inelastic, DAP sales going forward are likely to come under pressure because of higher prices. According to the latest numbers released by the NFDC, DAP offtake registered a decline of 1 percent in February to stand at 69k tons. Encouragingly, despite closure of FFBL’s DAP plant during the earlier part of the month; total DAP sales increased by 17 percent MoM. Company wise break-up show that FFBL registered a production of 53k tons and sold 47k tons (up 76 percent and 63 percent) while Engro’s offtake stood at 20k tons (down 51 percent and 21 percent) tons of DAP in February. The total consumption of DAP is around 35 million bags in the country, sources said and added that 20 million bags are used in rabi season in Sep-Oct while 15 million bags are consumed in kharif season in Feb-Mar. They stated that around 30 percent of DAP is made locally while 70 percent of the production is imported. And whenever the prices are increased in the international market the local prices are also surged but this time increase is made without any excuse, sources said and aim is only to loot the farmers.They said that currently 8 million acres of land is under cotton cultivation, 6 million acre of land is under rice cultivation while 2.2 million acre of land is under sugarcane cultivation which amount to 70 percent of the total Pakistan export. Agri President of Anjuman Kashtkaran Punjab (AKP) Peerzada Abdul Ali Zakir Usmani said that the surge in fertilizers and DAP rates is actually a conspiracy of the fertilizers companies against the national export.He said pesticide companies are befooling the farmers and stressed need for taking stern action against them. He rejected the withholding tax on agri produce, urging the government to mention weight and price on urea sacks. He said around 200 million bags are sold annually in the country but neither the price nor the weight is mentioned on any sack of DAP or urea. He demanded the government to direct all public sector banks to issue agri loans on soft terms for the enhancement of agri production in the province. He demanded of the government to review its agriculture policy through comprehensive debate and consultation with the stakeholders to ensure the food security in the larger interests of the progress and prosperity of the country.