The current price reduction of urea by the domestic fertilizer plants would result in an annualized benefit of Rs 28 billion that would be passed on to the farmer community without any impact on the exchequer.
According to industry sources, urea price reduction will help sustain the agricultural sector, which is expected to witness a significant downturn in the wake of this unprecedented nationwide coronavirus pandemic.
The urea price reduction will complement the government's efforts to extend support to all sectors of the economy, particularly the agricultural sector, in the wake of COVID-19 disaster.
The COVID-19 outbreak, which is being described as a black swan event, is likely to pose unprecedented challenges to the country's agricultural sector that contributes 20 percent to the national GDP.
However, recently, led by Engro Fertilizers, the fertilizer industry has announced a reduction in urea prices to support the agricultural sector and ensure food security for Pakistan in the aftermath of COVID-19 pandemic.
Last Wednesday, Engro Fertilizers became the first fertilizer company to announce a further reduction in urea prices by Rs 240 per bag. Other industry players have also slashed the urea price to support the agricultural sector. With a cumulative price reduction of Rs 400 percent bag since the beginning of this year, the dealer transfer price has now been brought down to a level of around Rs 1600 per bag.
According to Imran Ahmed, Chief Financial Officer for over 50 years Engro Fertilizers has been a trusted partner of farmers and has ensured the availability of locally manufactured affordable urea.
"This latest price reduction is in line with the company's purpose is to address the most pressing issues. Covid-19 is a national crisis and Engro Fertilizers is responding to it by supporting the government's priority of sustaining the agriculture sector," he added.
According to analysts, the industry-wide urea price reduction will also help to sustain the agricultural sector in this difficult time as agro sector is expected to witness a significant downturn in the wake of this unprecedented nationwide pandemic.
The government has already announced Rs100 billion for SMEs/agriculture sector with mechanisms to be finalized in collaboration with the SBP. The government relief package also includes Rs 280 billion as payment to wheat farmers.