Fertilizers on the road to drought?

At a time, when a lot of Pakistani farmers are busy counting their crop losses, many close to the agriculture sector fear not-so-good times ahead, for the fertilizer industry, if the government delays supportive measures.
Ample and timely provision of seeds and fertilizers, at concessional rates, is what the agriculturists are demanding to cope with the devastation that the floods have brought to the crops ready for harvest. How will the floods impact the fertilizer off-take is yet to be seen, but it may not be very encouraging as the off-take numbers for July show a grim picture.
The 15 percent year-on-year decline in urea sales for July isn that alarming, as the previous years urea-off-take for July was exceptionally higher than the average July consumption. What is worrying is the steep decline in the phosphate fertilizer consumption - which nosedived by no less than 78 percent year-on-year.
Save for 2008, when the price hike and absence of subsidy resulted in almost a halt of DAP sales, you will have to go back to 1995 to trace a precedent of July DAP consumption, as low as 49,000 tons in the growing phase of major Kahrif crops.
Naturally, the crop yield is not going to be any better if the trend continues for long, as the NP ratio applied in Pakistan is already amongst one of the worst in the region. Apparently, the higher price of DAP seems to be the major impediment towards higher off-take, as the government no more offers subsidy on phosphate fertilizers.
The country is sitting on a two-year high DAP inventory of 0.48 million tons, which should send shivers down the spine of the sole DAP producer Fauji Fertilizer Bin Qasim. It seems highly unlikely that the FFBL would end up selling all its produce in CY10, as the DAP off-take during CY10 to date, has been half of what it was a year ago.
Worse still, there are even thinner chances of the DAP demand rising in the immediate future, at least for the upcoming Rabi season. A large portion of the cultivable land, which is flooded, bodes well for the farmers as it would significantly enhance the land fertility. Experts are very optimistic of bumper Rabi crops as the land still holds the capacity to absorb water.
All this means bad news for fertilizer sellers, especially the DAP ones. A more fertile land would require fewer fertilizers and only the application of seed can do wonders. Even if the fertilizer is applied, it will mostly be Urea and not DAP.
In case of no government support in the form of seed provision to the farmers, fertilizer sales would take a larger blow as it might also dent urea sales.