LAHORE: The farming community is experiencing a urea shortfall of around half a million tonnes – manufacturing deficit 300,000 tonnes and buffer stock 200,000 tonnes – and this shortfall has turned the market topsy turvy, Pakistan Kissan Ittehad President Khalid Mahmood Khokhar claimed on Friday.

Explaining the urea shortage in a press release, he stated that current consumption estimates of urea were around 6.7 million tonnes due to increase in the area and usage in cereals and cotton crops. He also mentioned that Pakistan required additional 200,000 tonnes as a buffer to keep prices stable.

Unfortunately, during 2023, the production estimate of domestic urea may hardly touch 6.4 million tonnes against a demand of 6.7 million tonnes. Thus, the farming community is experiencing a shortfall of around 500,000MT.

While sensitising the authorities, Mr Khokhar highlighted the fact that the full production capacity of the industry was not being utilised at its optimum level, thus contributing to the shortfall in urea availability. He also suggested a workable solution to avoid recurrence of urea shortage in future to safeguard the farming community from middlemen exploitation.

Presently the industry is selling urea at different market retail prices ranging from Rs3,410 to Rs3,795 per bag due to variable gas charges imposed on different manufacturing plants. This situation encourages the middleman to exploit farmers by charging around Rs1,000 per bag over and above to the prescribed maximum retail prices by the manufacturers. On an annual basis, the middlemen have grabbed more than Rs100 billion as black money from the farmers’ pocket. Talking about the current situation, he said historically urea consumption during December ranges between 850,000 and 900,000 tonnes whereas total availability during this month would not be more than 650,000 tonnes. The demand-supply situation clearly indicated that there was a vivid shortfall of 250,000 tonnes which provided an opportunity for black-marketing and exploitation of farmers by the middlemen.

He said if we look at the imbalanced demand-supply situation, the following two prime reasons underpinning the gravity of situation.

1- Non-availability or low pressure of gas for urea manufacturing plants resulted in urea production loss of around 300,000 tonnes.

2- Despite ECC’s approval to import 200,000 tonnes urea, nothing materialised till date, which has further aggravated this problem.“

Talking about the economically viable solutions, he opined that the gravity of the situation could have been managed if required gas was provided to the urea manufacturing plants round the year. Secondly, timely execution of import decision would further have minimised the gravity of the issue.

He reminded that country witnessed the same shortage scenario last year, due to intermittent gas supply to urea plants and the deficit was bridged through expensive import of 500,000MT at a cost of precious forex.

The situation urgently warrants intervention to control the situation now and avoid such happening during 2024 and ensure uninterrupted gas supply to the fertiliser industry and ensure urea.

Published in Dawn, December 9th, 2023

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