The crises are severe especially in those areas where the time for first irrigation has arrived. Supply in these areas has dropped by around 50 per cent and the price escalated between Rs850 and Rs950 per bag.
The market watchers think, given the quantity and timing of import line-up, the crises will be overcome by mid-February. But, unfortunately, that would at least be 30 days after the last bag of urea is applied to wheat crop. Even the late sown wheat in Punjab and Sindh, being an early bloomer, would need urea the latest by January 15 (the time the crop canopy is formed).
Currently, urea crises is because of delayed imports and officials engaged in ensuring prescribed rate rather than improving supply. With the entire official machinery engaged in price maintenance, the unscrupulous distribution channels have squeezed supplies to make money. Both sides of the crises speak of management failure.
The federal government, importer of urea, knows that its demand is at its peak in November and December. Its requirement during these months touches the figure of one million tons for wheat alone (November - around 450,000 tons and December - around 600,000 tons) if calculated one bag per acre basis. Some 100,000 to 200,000 tons of urea are also needed in January for the late sown crop.
Planners also know that the required quantity of urea should not only be in the market but also reach the designated points by the beginning of November. The supply then has to be sustained for next two and half months.
They were also aware of the shortfall this year because of three factors – drop in domestic production because of gas crisis, increase in crop acreage and urea being relatively cheaper fertiliser. The gas crisis normally brings down urea production from 4.2 million tons to 3.15 million tons.
With the latest 50 per cent increase in support price, wheat is now the only crop which has favourable terms of trade for farmers, given price crashes of cotton and rice, which led to increase in wheat acreage.
Since all other fertilisers, especially DAP, are exceptionally expensive, farmers are using additional quantity of urea to make up for the loss. By doing so, they are ignorantly promoting unbalanced use of fertiliser and hurting soil fertility, but that is another story. These three factors have put additional pressure on demand of urea, whereas the supply is normal, creating dangerous deficit.
The current domestic production is around 4.2 million tons, and 60 per cent of it is consumed during the Rabi season given the magnitude of the wheat cultivation, which covers almost 50 per cent of cultivable area in the country. During the Rabi, Punjab alone, where the crisis is concentrated because of crop cycle, needs 600,000 tons in December where now only 300,000 tons is available.
Though around 120,000 tons of imports have arrived, to make the matter worse, 70,000 tons have been unloaded at the Gawadar port, which would take five days more than from Karachi port to be transported upcountry.
Both, the federal and the provincial governments are working to ensure price at Rs635 per bag rather than improving supply. Since both the governments do not have any distribution mechanism, they have to depend upon dealers’ network developed by fertiliser manufacturers. These dealers know that their profit lies in squeezed supplies and higher prices. They are also aware of the fact that the government cannot flood the market before second week of February. As the handicapped governments fight over price, the farmers are suffering on both ends: the officials cannot ensure price and the dealers are ready to sell the product at official price. The dealers now sell urea on personal references, where they are sure they would not be reported for high price.
Though it would be too early to calculate loss in final yield, especially because of timely rains in December that apart from supplementing water has also provided crucial nitrogen supply to the crop, the mismanagement of planners is evident. Though there is enough supply of DAP in the market, the price factor, which is five times more than urea, has become the biggest deterrent for the farmers.
With the agriculture sector suffering from huge uncertainties because of vagaries of weather, the government policy planners would do well to spare it from man-made disasters. The current crisis could have been averted. Even now, the government should reconsider its priorities and improve its management skills.
