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Fluctuation in urea prices

July 08, 2012

WIDE fluctuation in the prices of urea has become a matter of daily routine resulting in marked drop in fertiliser use by growers. Because of the price spiral in the first week of July, dealers claim availability of huge stocks with lower sales.

In June and July, urea saw a huge increase. The per bag company price of urea in June was Rs1,650 before it increased to Rs1,700 then to Rs1708 and finally to Rs1759 in the first week of July.

“I am noting constant drop in the use of fertilisers since big jump in their prices. Only recently urea price was fixed at Rs1,759 including dealer’s commission of Rs31. We are selling a bag of urea between Rs1740 and Rs1750,” says Abdul Aziz Arain, a fertiliser dealer of the city.

“When the government levies sales tax, withholding tax or turnover tax the same are recovered from growers,” Arain says. Imported urea was selling for less than the price of the local product.

Another dealer Kamran Aziz points out that as urea demand has gone down, dealers a are selling an Engro bag between Rs1740 and Rs1750 in retail. There are dealers who had purchased large stocks previously at lower rate taking advantage of some big consignment bound for Punjab.

The growers argue that as the government provides gas to fertiliser companies, it should regulate prices of their products.

According to Mehmood Nawaz Shah urea price remains unchecked. “If the issue of water shortage, prices and fuel are put together, it leaves a very negative impact on per acre yield of crops,” he says. That is why it is high time for the government to start regulating inputs prices.

“Fertiliser companies increase prices unilaterally keeping farmers at the losing end,” he says. For instance, the government imports fertiliser but fails to make sure that it is sold at the price fixed by it. This is due to lack of a proper regulatory environment,” he adds.

The price of DAP during the sowing season went up to Rs4,093 but then it dropped to Rs3,750 amidst decline in its use by farmers. DAP sales has dropped 50 per cent and urea’s by 40 per cent , according to fertilizer dealers.

Growers are unable to prepare rice nurseries in lower and upper Sindh. “They are in double jeopardy. On the one hand, the summer crop season is passing fast and water flows are yet to show improvement but, on the other hand, increase in prices of farm inputs is a cause of worry too,” says Aziz Arain.

An inquiry by the Competition Commission of Pakistan (CCP) revealed that the hike in the prices of fertiliser ‘seems to be unjustified and unreasonable.’

The CCP says the increase is not only unprecedented but highest during the last 20 years. It has issued show-cause notices to fertiliser producers.

President of Sindh Chamber of Agriculture (SCA), Dr Syed Nadeem Qamar, says: “We will be moving the court in the backdrop of CCP’s findings which is an important report from farmer community’s point of view.”