LAHORE: The industry estimates that the cost of recently approved gas rates and the effect of imported urea on the local market will have a significant impact on price, potentially raising urea from its present level of Rs3,800 to Rs5,500 per bag.
The sector claims that the government just bought 225,000 bags of urea at a cost of Rs6,500 each. The price increased to Rs6,700 per bag after shipping and packing expenses were deducted. The state is now proportionally transferring it on to the manufacturing sector and asking it to incorporate it in its total revenue price because it is unlikely to sell it at this price or provide subsidies for it. New gas rates that were just agreed by the Cabinet and the Economic Coordination Committee with retroactive effect on February 1 are what cause the second shock wave. In order to recoup the cost of fertiliser that has already been sold, the industry will need to boost prices even further.
According to Pakistan Kissan Ittihad’s Khalid Khokhar, “this is disastrous, to put it mildly.” He cites India as an example, where urea is sold for Rs 900 (in Pakistani rupees) a bag and the country offers a $24 billion annual subsidy to the fertilizer industry. Instead of imposing unusual gas price hikes on the business, the government should devise other strategies to prevent a sharp rise in the price of urea.
Estimates based on updated gas prices indicate that a rise of about Rs1,700 per container is likely to have significant effects and may prevent small farmers, who make up 90% of the farming community, from being able to grow crops on their land. Effective support measures are urgently needed in 2023 due to the predicament of maize and cotton growers, who have incurred huge losses as a result of the low cost of their produce.
Mr. Khokhar provides an example to further illustrate the effects on farmers and farming: in 2022, the price of wheat was Rs3,900 per 40 kg, while the price of urea was Rs2,300 per bag. But if the price of urea were to rise to Rs. 5,500 and the price of wheat remained the same, farmers’ livelihoods and farming itself would be severely limited. Farmers might not be ready to develop their entire property because of the drastically imbalanced relationship between costs and revenues. According to him, it would make farming as a whole economically disastrous for farmers.
He said, “This increase in the price of urea may inflame farmer feelings, and if government entities were to purchase wheat at its present price, it may spark social upheaval throughout the nation.
SOURCE: DAWN NEWS
