Levy of RGST this year: fertiliser dealers to earn billions of rupees: experts

Fertiliser dealers will earn billions of rupees as windfall profits if the government imposed "Reformed General Sales Tax (RGST) this year, fertiliser market sources told Business Recorder here on Friday. They said that fertiliser dealers have made heavy speculative investments in storing the urea and DAP fertilisers with the hope that they would earn about Rs 400 to Rs 500 profit per 50 KG bag after levy of RGST before December 31, 2010.
It may be added that the sowing of Rabbi crops season from October 1 to December 31 is the prime period for the sale of costly DAP fertiliser which is used in the fields at the time of sowing of strategic wheat crop, oil seeds, canola, mustards, vegetables, fodder etc, over an area of about 3 million acres in the country.
In an interview Chief Executive Officer and General Manager Finance Fauji Fertiliser Bin Qasim Limited Syed Aamir Ahsan said that the fertiliser manufacturers have advised the federal government not to levy RGST on fertilisers during the on-going Rabbi crops sowing season as it would increase cost of fertilisers by about Rs 400 to Rs 500 per 50 KG bag burdening the poor farmers who have already been hit worst ever floods and are cash starved.
He said that RGST levy would have a negative effect on the agriculture sector as use of urea and DAP fertilisers has already declined by about 10 percent. There are sufficient quantities of DAP and Urea fertiliser available in the local market to meet the domestic needs, therefore, there is no need of DAP imports this year, he added.
Meanwhile, a spokesman of the Federal Ministry of Industry and Production has said that sufficient stocks of fertiliser for the Rabbi crops (October to March) are available at the door steps of the farmers in the country. The current urea stock stood at 0.835 million tons and its production would be around 2.6 million tons making the total availability of urea 3.5 million tons against the demand of 3 million tons.
The spokesman said that 1.6 million tons of DAP fertiliser was available in the market against which 0.6 million tons off-take was anticipated during the current season. Talking to this scribe President Agri-Forum Pakistan Ibrahim Moghal said though sufficient quantities of fertiliser are available in the country yet the government has no control over the prices of the fertilisers being charged by the dealers from the farmers. "The dealers are charging up to Rs 3,000 per 50 KG DAP bag in the south Punjab districts of Muzffargarh, D.G. Khan and Rajanpur against the normal price of about Rs 2,600 per bag, he added.
He said President south Punjab Agri-forum Rao Afzal has lodged a complaint with DCO Rajanpur about profiteering and unethical trade practices by the fertiliser dealers yet the DCO had declined to regulate or check the sale of the fertiliser at a time when it was urgently needed by the flood hit farmers. He said about 3 million DAP bags of 50 KG would be required for the sowing of canola, wheat, mustards, vegetables, fodder, oil seeds, sunflower, maize over an area of 30.5 million acres of land during the next six months. If the prices are not checked, then farmers would be fleeced at least by Rs 15 billion by the fertiliser dealers as a windfall.
Moghal again stressed that each bag of urea or DAP must have a printed price tag, production and expiry date so that the farmers were not cheated and the agriculture sector of the country is developed on the modern scientific lines.