LAHORE: Discussing the current urea shortfall faced by the farmers, Pakistan Kissan Ittehad (PKI) President Khalid Mahmood Khokhar has called for developing a long-term strategy for domestic urea availability to ensure food security and prevent recurring shortages.
“Ensure uniform urea pricing nationwide, as historically practice. This measure could deter middlemen from exploiting price differentials.
Despite all measures, in case any shortfall arises a prompt decision-making mechanism needs to be developed to save farmers from exploitation during short supply scenario,” Khalid Mahmood Khokhar said while talking to Business Recorder here on Tuesday.
He emphasised that the current annual urea net consumption estimate stands at 7,000,000 metric tons due to expanded agricultural areas and increased usage in cereals and cotton crops.
Stressing the need for an additional 200,000 metric tons of urea as a buffer stock to stabilise prices and maintain positive market sentiments, he revealed a worrying projection: Domestic urea production in 2023 barely reach 6,400,000 metric tons against an annual demand of 7,000,000 metric tons, which showed that the country may face a definite shortfall of 600,000 metric tons despite ongoing imports of 210,000 metric tons, arriving in Dec 2023 and Jan 2024.
Beyond the urea shortage, Khokhar shed light on another critical issue affecting farmers: the exploitation by middlemen through overcharging. These intermediaries currently charge farmers around Rs 1,000 per bag above the prescribed maximum retail prices (MRPs) set by manufacturers.
This practice has resulted in middlemen accumulating over PKR 120 billion in black money annually from farmers. This exploitation stems from the industry selling urea at varying MRPs (ranging from PKR 3,410 to 3,795 per bag) due to variable gas charges imposed on different urea manufacturing plants by the government.
This situation provides ample opportunity for middlemen to overcharge, exacerbating the problem. Mr. Khokhar suggested that concerned authorities enforce uniform urea pricing nationwide, as historically practiced. This measure could deter middlemen from exploiting price differentials.
Khokhar further added that keeping in view the current Agri commodities’ prices situation regarding crops production cost, farming business is gradually becoming unviable, especially for the small farmers – constituting 90% of farming community.
Due to such a disproportionate equation between expense and income, farmers may not be able to cultivate their entire piece of land. To make farming business economically viable, rationally urea price should not be more than Rs 3000 per bag, he demanded.
Identifying the primary causes behind this shortfall, Khokhar pinpointed that currently the country was facing a shortage of approximately 500,000 to 600,000 metric tons. Under such imbalance demand & supply situation, the government writ needs to be exercised to ensure urea availability at MRP prescribed by the urea manufactures.
Proposing actionable solutions, Khokhar urged authorities to prioritize year-round gas provisions to urea manufacturing plants. This step aims to optimise domestic industry production capacity to stabilise market prices and minimise reliance on imports, thereby conserving vital foreign exchange as well.
Urging government intervention, the current situation demands immediate action and long-term strategy to control the present circumstances and prevent similar occurrences in future, he concluded.
Copyright Business Recorder, 2024
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