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Farmers have spent an identical amount on the two key fertilizers in the last three Rabi seasons. The pattern of spending meanwhile has not changed for many years now. Make sure you apply enough nitrogenous fertilizer, and then worry about the other types. Urea application has increased by over 10 percent year-on-year in the first 5 months of Rabi season, having stayed stagnant for the last two. DAP application, meanwhile, keeps coming down.

The urea to DAP application ratio at 3x for the latest Rabi season (with a month remaining) is the worst in recallable memory – and pales in comparison to the 5-year average of 2.1x. Balanced fertilizer application is not something Pakistan is known for, and from how things are shaping up so far, the upcoming Kharif season may well be the toughest yet, in terms of encouraging phosphate nutrient application.

Farmers’ purchasing power may well have increased over the years, but that clearly does not show in the fertilizer purchasing patterns. With a significant hike in wheat support price, there could be a case of few more bucks to spend around. It remains to be seen if that spending go towards improve the yields or buying more SUVs.

The DAP national average retail price for March 2021 was reported at Rs5417 per bag by the PBS in the latest weekly SPI. This is 58 percent higher year-on-year, and the highest ever recorded in the country’s history. For more context, just the increase in price of a bag of DAP in one year is more than a bag of urea itself.

To no fault of Pakistan’s own, DAP prices have skyrocketed, as the raw material Phosacid and Phosrock have both soared as global commodity prices move north. The prices may cool off a bit, but future Phosacid contracts do indicate that the relief won’t be a big one – as Phosacid continues to trade 60 percent year-on-year higher for September delivery.

Pakistan continues to import two-third of its DAP requirement and even the local production is highly dependent on raw material prices. It can be said with some degree of certainty that DAP off-take will take a massive battering at current rates. The government may have to prepone any likely decision on DAP direct subsidy – as the Kharif season will soon be here.


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