MI&P expresses satisfaction over urea supply, demand situation

ISLAMABAD: In a meeting with the fertiliser industry, the Ministry of Industries and Production (MI&P) has expressed satisfaction over the prevailing urea supply and demand situation, while also assuring the industry of resolving all pending issues to ensure food security in Pakistan.

The meeting participants appreciated the timely steps taken by the government for continued growth momentum of the agriculture sector through the Covid-19 relief package and locust control efforts.

These policies and continuous gas supply to the industry resulted in adequate urea stocks to avoid any shortages.

Further, the RLNG-based fertiliser plants of Fatima Fertilizers and Agritech were selectively operated by the government to ensure adequate inventories, without causing any unnecessary burden on the national exchequer.

As per discussions during the meeting, the RLNG-based plants are expected to start operations from April or even earlier this year to produce sufficient stocks in the market.

Figures presented in the meeting reveal that the year 2021 started with an inventory of 250,000 tonnes and with the total expected industry production of six million tonnes, the market will remain sufficiently supplied to cater to the annual demand of six million tonnes with a safety stock of over 200,000 tonnes.

For the Kharif season, urea demand is projected to be three million tonnes, while 2.9 million tonnes of urea are expected to be sold in the Rabi season 2021/22.

The robustness of urea demand in 2021, which is now higher by 2.1 percent than the five-year average, reflects strong agricultural performance and improved farm economics on the back of lower input costs and better support prices offered by the government.

The meeting participants recognised that the government was able to control prices of inputs and only nominal increase of three percent was witnessed in local fertiliser prices despite a significant surge in the global market.

International urea prices are trending at US$ 290 per tonne equivalent to Rs2,800 per 50 kg bag, which is at a premium of around 65 percent to the local rates of around Rs1,650 per bag.

The meeting also highlighted swift action taken by local administrative authorities against urea dealers, who were reported to be overcharging farmers by Rs50-100 per bag compared to the official rates.

The ministry reiterated the government's resolve to take stern action against profiteers and hoarders who manipulated the market to create artificial shortages and took undue advantage of the farmers.

The industry shared challenges being faced on account of recent developments on tax front, while the adverse impact of long outstanding subsidy was also put forward again. Keeping in view the importance of fertiliser industry to Pakistan's economy and the government's business-friendly policies, the ministry assured urea manufacturers of resolving their issues on a priority basis.

Copyright Business Recorder, 2021