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Government fixes fertiliser price at Rs1,850 per bag

  • Agreement reached between companies and ministry of industries
Published May 31, 2022
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The government and fertiliser companies have reached an understanding on Tuesday to fix fertiliser price at Rs1,850 for a 50kg bag.

According to a statement, an agreement has been reached between the Ministry of Industries and fertiliser firms.

Earlier, the government fixed urea price at Rs1,768 per bag however, fertiliser producers stopped selling urea and demanded refunds. The firms had expressed their dismay over prices fixed by the government.

Urea fertiliser being sold at higher rates

“The government and fertiliser firms have agreed at a price of Rs1,850 per bag,” it said. “Before, urea bag was being sold for Rs2,033.”

Speaking to Business Recorder, Saqib Hussain, a senior equity research analyst at Akseer Research, said that last week, the government fixed fertiliser price at Rs1,768 per bag which irked producers.

“The producers were selling fertiliser at Rs2,033 per bag and hence, a price of Rs1,768 meant that they were selling at a loss of Rs265 per bag,” he said. “This week, government officials met with representatives of fertiliser firms and both sides unanimously agreed to fix urea price at Rs1,850 per bag.”

Govt allows import of 0.2MMTs of urea

He added that impact of the new price on fertiliser firms is still negative because they are still going to sell at a loss but it was marginally lower than when the price was fixed at Rs1,768 per bag.

Talking about farmers, he said that the development was positive because prices had fallen for them. He was doubtful if the drop in price for farmers will impact food prices after six months or not.

“Urea manufacturers decrease prices as per government orders but dealers keep their margins stagnant,” he said. “When urea became scarce in the recent past, dealer sold one bag in the range of Rs2,800-3,000.”


Comments are closed.

samir sardana Jun 03, 2022 12:32am
How can blackmarketing in fertiliser take place in a nation with a GDP of 200 Billion USD The Solution - 1 1st - The dealers have to keep their stock data online and updated.As soon as the invoice is generated,for a sale,the stock adjustment has to be contiguous (same for stock transfers across depots and dealers).This is an elementary ERP - and a 1 time investment - which is also required by the dealer,as the same dealer will also be dealing in cement,seeds,pesticides,weedicides,agri implements and equipments etc. 2nd - The entire dealer stock should be accessible online,to the Fertiliser company,and its online sale portal (for sale to farmers) 3 rd - Farmers can log into the Fert company portal,choose the SKU and quantity,pay online and get a delivery challan or get a provisional delivery challan with the bank coordinates (to suit the farmer location), and the farmer can take the said challan,and deposit the money with the bank.dindooohindoo
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samir sardana Jun 03, 2022 12:33am
The Solution - 2 4th - Bank will do a daily batch upload on Fert company server,& the next day, the provisional challan,will show as fully paid - & the farmer will download or get an email or bar code of the delivery challan 5th - Farmer will take the delivery challan & DEM& delivery from farmer (so no cash changes h& s - it is just a despatch point) 6th - Dealer has to only service the farmer,& impart agri best practices,& will be paid for the rent, insurance storage,fumigation,teriary freight,power,IT hardware.loaders,staff & the working capital employed in the business - in the form of rebates & discounts 7th - Dealer will not take credit risk,& sales on credit will be kept as low as possible.But in the case of credit sales also,based on the past sales patterns,crop insurance & financial assessment of farmers - credit limits should be set by the DMS (within the norms laid down by the fertiliser company),& delivery challans issued to the farmer online.dindooohindoo
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samir sardana Jun 03, 2022 12:34am
The Solution - 3 8th - Fert Company will use its DMS (Dealer Management System) to analyse dealer performance and the ROCE earned by dealers and its variation,to drive performance,linked to customer satisfaction 9th - Fert company will capture via DMS the name,geography,crop type,qty of fertiliser bought,payment pattern of each farmer to check hoarding,as also,to obtain feedback 10th - If stocks are online,then sales are online,and so,the rebates and discounts from the Fert company to the dealer should be paid automatically every 15 days,so that the capital employed of the dealer is at the MINIMUM.REDUCE THE CAPITAL EMPLOYED of the DEALER,to give him a HIGHER ROE,and ALSO,AT THE SAME,REDUCE THE DISCOUNT AND REBATE COST,TO THE FERTILISER COMPANY.dindooohindoo
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samir sardana Jun 03, 2022 12:35am
The Solution - 4 11TH - Since Fert sale is a cash and carry business,the ROCE of the dealer should be controlled by the Fertiliser company,to be NOT more than 2 times the borrowing rate of the highest rated pvt sector borrower,from a state owned Pakistani Bank.The dealer can change the D/E mix to maximise ROE,or leverage common costs, in the trading of cement,seeds,pesticides,weedicides,agri implements and equipments etc.Else,the Fert company can introduce new dealers,in the same geography.dindooohindoo
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Masroor Jun 04, 2022 10:51am
Abi tak amal to ho nai raha
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