Low prices boost fertiliser offtake

Published January 31, 2021
Improved farm economy coupled with low fertiliser prices enhanced urea offtake in the country during July-Dec 2020 compared to the same period in the previous year. — Dawn/File
Improved farm economy coupled with low fertiliser prices enhanced urea offtake in the country during July-Dec 2020 compared to the same period in the previous year. — Dawn/File

ISLAMABAD: Improved farm economy coupled with low fertiliser prices enhanced urea offtake in the country during July-Dec 2020 compared to the same period in the previous year.

While most of the sectors suffered during the Covid-19 lockdowns for most part of 2020, the fertiliser industry flourished with the urea offtake during July-Dec 2020 at 3.36 million tonnes, compared to 3.34m tonnes in the same period a year ago.

Analysts have attributed several factors to the enhanced urea offtake in the year 2020 including higher prices of sugarcane and wheat amid low fertiliser prices.

“The GIDC impact led to the decline of urea by around Rs350 per bag of 50 kilograms. This too encouraged farmers to consume more urea and phosphates compared to the previous year,” said Hammad Hussain, an analyst at Optimus Capital.

The year 2020 started on a positive note. Total inventories in the period July-Dec 2019 were at 3.26m tonnes. The previous six months (Jan-June 2019) had been dry for the fertiliser sector, with total inventories limited to 1.04m tonnes. As a result, significant efforts were made to improve the supply side and in July-Dec 2019 urea production in country reached 3.26m tonnes.

Subsequently, the first half of calendar year 2020 saw inventories reaching 3.75m tonnes. However, in July-Dec 2020, urea inventories were down at 2.75m tonnes. Urea production in July-Dec 2020 was 3.22m tonnes.

Meanwhile, the National Fertiliser Development Corporation (NFDC) has predicted higher urea offtake for the remaining months of the Rabi season.

Currently, urea is available in the country at around Rs1,760 for 50 kg bag and the price tag is likely to remain stable in the coming months too.

Urea production is likely to improve and remain stable in the year 2021 too as the fuel will be available to the RLNG-based plants, Mr Hussain said.

At the same time, di-ammonium phosphate (DAP) offtake too improved in the country to 1.57m tonnes in July-Dec 2020 compared to 1.38m tonnes in July-Dec 2019.

Published in Dawn, January 31st, 2021

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