'Withdrawal of subsidy on fertilizer to directly burden farmers'

The withdrawal of subsidy on fertilizer would directly burden farmers and give a major setback to their fertilizer buying capacity with ultimate affect on maize and sugarcane growers. Industry sources said that the already suffering agricultural sector faced a setback in the form of withdrawal of the cash subsidy on urea that will exacerbate its problems. Farmers were already suffering from the absence of appropriate long-term policies and the fresh move would further hit them.
There is no denying that the farmers have benefited from the subsidy which resulted in a better per acre yield; however withdrawal of subsidy can affect the per acre yield of crops if farmers do not apply adequate fertilizer due to high prices after subsidy withdrawal.
The government had announced a subsidy of Rs 390 per urea bag including cash subsidy of Rs 156, GST subsidy of Rs 184 and price reduction of Rs 50 by the manufacturers. The price of urea had gone down from Rs 1,790 to Rs 1,400 per bag following the announcement of the subsidy. The market dynamics further reduced per bag price and producers were selling urea bag as low as Rs 1,200-1,300 and same trend was observed in DAP and other fertilisers. This helped the farmer economics improve substantially. But after the withdrawal of subsidy, now already burdened farmers will face a major setback to their fertilizer buying capacity. The immediate burden will be felt by maize and sugar cane growers.
Urea off-take in December stood around 0.9 million tons, which makes the second half of 2015-16 the highest ever urea off-take period. In that light, the decision apparently lacks wisdom. The industry currently sits with huge inventory pile of urea, exceeding 1.5 million tons; comfortable enough for another quarter, assuming nothing is imported or produced. The government's own inventory (imported fertilizer) is also believed to be touching 0.5 million tons, and it has been struggling to clear the same, they maintained.
Farmers and opposition political parties have also reacted strongly against the decision of subsidy withdrawal. Pakistan Peoples Party Parliamentarians (PPPP) has submitted a calling attention notice in the National Assembly Secretariat regarding the withdrawal of subsidy by the federal government on fertilisers.
Farmers Unions have announced to record their protest in front of Parliament and many opposition parties including PTI are ready to help them get a better decision in their favour.
Industry analysts are hoping that the agri policies will be made after proper consultation with all stakeholders which include the farmers, farming input providers and the government. The government's decisions in agriculture should look into future and must not give impression of short-term, hurriedly planned measures as displayed in subsidy issue and Kissan Package.