LAHORE: The Punjab government’s direct subsidy transfer mechanism under the Kisan Card initiative and improved farm economics are likely to result in higher sales of phosphate and potassic fertilisers and improved crop output in the coming months.

Last month, Prime Minister Imran Khan launched Kisan Cards in Multan as part of the government’s agricultural transformation initiatives. Kisan Cards will pass on a direct subsidy of Rs117 billion to the farmers on DAP (diammonium phosphate), seeds and pesticides, while also enabling them to access loans and crop insurance. On the occasion, PM Imran Khan also announced increasing the subsidy on DAP from Rs500 to Rs1,000 under Kisan Card.

“The increase in DAP subsidy in Punjab is expected to boost sales as farmers have benefited from higher wheat support prices and better water supplies. If Sindh follows suit to announce a scheme similar to Kisan Card as well, then farmers will be able to procure DAP, and high quality seeds and pesticides at cheaper rates to help the agriculture sector comfortably surpass growth targets”, according to an industry analyst.

Last year, the federal government had announced a special Rabi package to provide subsidy on DAP, phosphorus and potassium fertilisers. The provincial governments were expected to share 30 per cent of the subsidy amount. However, the targeted subsidy package on agriculture input remains unmaterialised in Sindh as the provincial government has still not reached a consensus on its implementation mechanism.

He added: “In the first quarter of 2021, DAP sales surged by 51pc compared to last year even though the rates showed an upward trend due to global supply-demand dynamics. The DAP prices are expected to normalise from current levels in the second half of the year when around 70pc of the total DAP sales are recorded. The current dealer transfer price of Rs 5,400-5,525/ bag in Pakistan is still lower than global rates of Rs 5,625/bag ($590/ton). ”

Industry figures of April estimate DAP offtake at 45,000 tons, while urea sales witnessed an increase of 26pc compared to last year. Urea sales have continued to show consistent growth on the back of robust demand and availability of urea at Rs1,717/bag compared to the global rates of more than Rs 3,200/bag. The region’s urea prices have jumped by over 60pc in the last 10 months due to short supplies and strong agronomic demand. However, farmers in Pakistan have remained protected from the uptick in prices due to self-sufficiency achieved in urea production under fertiliser policy of 2001.

Published in Dawn, May 6th, 2021