Prices of all kind of fertilisers have increased by 10 to 20 percent in the markets of Southern Punjab following the imposition of General Sales Tax on agriculture inputs. The DAP prices have jumped by Rs 779 to Rs 4,059 per bag, while the rates of urea have escalated by Rs 110 to Rs 1,150 per bag, according to survey carried out by this scribe on Wednesday.
Market sources told that before the imposition of 17 percent GST on agri inputs the urea was available in the market at Rs 1,040 per bag, while the DAP was being sold for Rs 3,280 per bag at retail level. They said that different companies have fixed different rates for their fertiliser products, however the raise in the rate after the calculation of new tax would mount to Rs 800 per bag for DAP, while for urea it would be Rs 135 per bag.
FFBL have raised the DAP rate to Rs 4,069 per bag after imposition of new tax, they said. It is to be noted that just one month before the imposition of the new tax, the fertilisers companies had raised the prices of DAP by Rs 100 per bag to Rs 3280 from Rs 3180 without any rise of rate in the global market, putting the additional burden of over Rs 2 billion on farmers, as around 15 million bags of DAP will be utilised in Kharif season.
According to industry sources, now dealers will sell the DAP bag for Rs 4100, up from the earlier rate of Rs 3280 per bag. Retailers said that Engro had already incorporated this hike last week. They believe this hike in DAP prices to be detrimental for DAP sales despite higher farmer income.
Thus, other cheaper substitutes of DAP like NP could see their sales boosting. With regard to major fertiliser manufacturers, FFC's and Engro's urea offtake declined by 2 percent and 9 percent, respectively in February. FFBL's offtake on the other hand, rose by 69 percent to 27000 tons during the same period. Bilal Qamar, a fertiliser sector expert, said that this was mainly due to an early turnaround this year owing to gas load management by the government.
While urea demand remains relatively inelastic, DAP sales going forward are likely to come under pressure because of higher prices. According to the latest numbers released by the NFDC, DAP offtake registered a decline of 1 percent in February to stand at 69000 tons. Encouragingly, despite closure of FFBL's DAP plant during the earlier part of the month; total DAP sales increased by 17 percent MoM.
Company-wise break-up show that FFBL registered a production of 53000 tons and sold 47000 tons (up 76 percent and 63 percent) while Engro's offtake stood at 20000 tons (down 51 percent and 21 percent) of DAP in February. The total consumption of DAP is around 35 million bags in the country, sources said and added that 20 million bags are used in Rabi season in Sep-Oct, while 15 million bags are consumed in Kharif season in Feb-Mar. They stated that around 30 percent of DAP is produced locally, while 70 percent is imported. Whenever the prices increase in the international market the local prices also surge but this time increase is made without any excuse, sources said.
They said that currently 8 million acres of land is under cotton cultivation, 6 million acres of land is under rice cultivation, while 2.2 million acres of land is under sugarcane cultivation, which amount to 70 percent of the total Pakistan export. Agri President of Anjuman Kashtkaran Punjab (AKP) Peerzada Abdul Ali Zakir Usmani said that the surge in fertiliser and DAP rates is actually a conspiracy of the fertilisers companies against the national export. He said pesticide companies are fooling the farmers and stressed need for taking stern action against them.
He rejected the withholding tax on agri produce, urging the government to mention weight and price on urea sacks. He said around 200 million bags are sold annually in the country but neither the price nor the weight is mentioned on any sack of DAP or urea. He demanded the government to direct all public sector banks to issue agri loans on soft terms for the enhancement of agri production in the province. He demanded of the government to review its agriculture policy through comprehensive debate and consultation with the stakeholders to ensure the food security in the larger interests of the progress and prosperity of the country.
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