FOLLOWING recent investigations into the rising prices of fertiliser, the Compe-tition Commission of Pakistan (CCP) a few weeks ago issued show-cause notices to the Fertiliser Manufacturers of Pakistan Advisory Council (FMPAC), the representative body of the fertiliser industry, and six of its member companies for alleged violations of competition laws.

These companies reportedly refused to provide pricing data requested by the CCP, prompting the matter to be taken to court, where the industry has sought a stay order. Following in the footsteps of the sugar and cement sectors, the fertiliser industry now appears to be the latest to display signs of cartelisation.

Pakistan’s fertiliser industry has a total production capacity of approximately 9.17 million tonnes per annum. This includes nine urea plants, one di-ammonium phosphate (DAP) plant, three nitrogen-phosphorus (NP) plants, four single superphosphate (SSP) plants, two calcium ammonium nitrate (CAN) plants, one sulphate of potash (SoP) plant, and two blended nitrogen-phosphorus-potassium (NPK) plants.

Urea dominates the production mix, comprising nearly 70 per cent of the total capacity, with an installed annual capacity of 6.31 million tonnes. The industry remains highly concentrated, with a few companies controlling the bulk of pro-

duction and sales, raising serious concerns about limited competition and possible anti-competitive behaviour.

The sector, made up of 14 industrial units, has for long been dominated by four major players, who together control about 82pc of urea market sales. In a major development last December, some mergers took place. Approved by the Lahore High Court’s Rawalpindi bench and completed within four months, the move consolidated the market dominance of the newly formed entity which now controls approximately 46pc of the urea market alone, and holds a monopoly in DAP production with a 53pc market share. Reports indicate that the behemoth has eyes set on mergers with nitrogenous fertiliser producers.

This growing concentration of market power among a few firms raises serious concerns about cartelisation. Reduced competition can enable dominant players to manipulate prices, potentially leading to exploitative practices that hurt farmers, and disrupt agricultural productivity.

It is heartening that the CCP has become increasingly proactive in addressing cartel-like behaviour across major industries by promoting fair competition and enforcing laws to prevent monopolistic control.

In the long run, to ensure that fertilisers remain affordable and accessible to all, especially to small-scale farmers, stronger government oversight and regulatory interventions are needed rather urgently.

Hussain Ahmad Siddiqui
Islamabad

Published in Dawn, May 14th, 2025