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.”

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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.”