Due to steep reduction in DAP prices world-wide, the government may withdraw subsidy of Rs 27 billion provided to the farmers for bumper wheat crop, a senior official of Food Ministry, on the condition of anonymity told Business Recorder on Wednesday.
He said that the government is providing a subsidy of Rs 2,200 on DAP per bag to make it convenient for the growers but due to reduction in fertiliser prices in the international market, the commodity prices in domestic market have started decreasing.
"In international market, the prices of DAP have decreased from $800 per ton to $500 per ton. It means that in the domestic market, the price of DAP per 50 kg bag has decreased from Rs 5,000 to Rs 2,700 to 2,900," the official added.
"IMF has not imposed any condition on Pakistan to withdraw the subsidy on DAP but if any condition is set by the international donors, then we would have no alternative except to withdraw subsidy from fertiliser," the official disclosed. He maintained that the government has decided not to impose agriculture tax because it would hurt the poor growers. He said the government has decided to enhance 120kg wheat production per acre that would lead to an increase of three million tons in the overall production with a total cultivated area of 20.1 million acres.
Wheat production in 2007-08 was just 21.5 million tons, missing the target by 2.5 million tons. The shortage of DAP and its imbalanced usage were the main reasons behind failure in achieving the wheat target.
Well-placed sources told this scribe that DAP is in surplus in the domestic market. They refuted the government's claim that one bag of DAP is being sold at Rs 2,700 to 2,900 per 50kg in the domestic market saying that in rural areas of the country one bag of DAP is being sold at Rs 3,100.
"One bag of urea is being sold at Rs 750 to Rs 800. So, the growers are using urea in stead of DAP," sources added. They said the prices of DAP increased to Rs 3,600 per 50kg during the last wheat cultivation season compelling the growers to use urea instead of DAP.
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