KARACHI: Pakistan Businesses Forum vice president Ahmad Jawad said the smuggling of urea fertiliser is continuing through different routes to Afghanistan despite tall claims of institutions concerned about action being taken against smugglers. “If not addressed timely country may face massive agriculture crisis in the Kharif season”.
Talking to Business Recorder, he said smuggling of urea to Afghanistan would result into shortage of fertiliser and increase in prices for our farmers who already bound to buy expensive DAP and potash ferilisers from the last couple of months.
The Pakistan Customs should stop smuggling of urea out of the country by clamping down on the borders forcefully, otherwise, the situation would put the fertiliser sector into a delicate situation, he warned.
On the other hand government plans to import some 200,000 tonnes of urea ahead of the Kharif season to mitigate any possible fertiliser shortages caused by the war in Ukraine, which has already taken a significant toll on global supply chains.
The Ministry of Industries and Production will move a summary for the import at the next Economic Coordination Committee meeting. The ministry hopes to ensure reserves of about 200,000 tonnes of urea by the time the Kharif crop sowing season to be started in May. This, however, may be an uphill task. Pakistan’s total output is around 600,000 tonnes a month.
However, Afghanistan and a few other Central Asian countries are popular destinations because the local prices are significantly higher than in Pakistan. The prices of urea in Pakistan are about 25 percent less than in international markets, which is already a healthy profit margin for unscrupulous elements.
In fact, this is also a major reason why Pakistan needs to import urea in the first place. Local production averages about 6.5 million tonnes a year, against demand for 6.1 million tonnes during the Kharif and Rabi crop seasons. Under normal circumstances, this margin would have easily allowed the government to arrange higher reserve stocks, but because of smuggling abroad, the country still face local shortages, forcing to spend precious foreign exchange on imports and burdening the national exchequer with the weight of further subsidies.
Ahmad Jawad also viewed the fertiliser industry in Pakistan is globally competitive, and will thrive under a completely deregulated environment. Following the intent of the Fertiliser Policy 2001, the selling price of fertilisers should become completely deregulated enabling free market forces to prevail.
Any subsidy going forward should be given directly by the government to the subsistence farmers to ensure continued affordability.
It is also projected in the year of 2022 urea demand in the country, will reach 6.3 million tones, he added.
On the question of continuous depreciation, he viewed Parliament of this country should intervene and may understand where we are heading and also summon Governor SBP on this important issue. As we speak one dollar touched Rs 180. The appreciation of the rupee is inevitable for the country. Until and unless we can’t do we will remain in the viscous circle of the inflation and keep enjoying the sky rocket rates of every commodity from imported fertilisers to food items.
Similarly the State Bank of Pakistan needs to assess, consider and communicate the side effects of monetary policy to the public for greater transparency, as well as to the government in order to align fiscal and regulatory policies to counter these unintended consequences.
Meanwhile Chairman of National Business Group Pakistan, President Pakistan Businessmen and Intellectuals Forum, Mian Zahid Hussain said due to unavailability of urea, reduction in farmer’s profit and mismanagement, wheat production is likely to decline sharply. Import of wheat should not be deliberately delayed like in the past as it will pave way for a serious crisis, he said. Mian Zahid Hussain said that wheat imports from Ukraine may not be possible this year due to the war.
Copyright Business Recorder, 2022