Fertilizer Crackdown Cause Price Decline By Rs. 600 Per Bag: Too Little, Too Late?

The recent administrative measures taken by the caretaker government and law enforcement agencies against the black markets have not spared the fertilizers either with prices declining as dealers and hoarders come under pressure.

Well-informed sources told ProPakistani that urea and DAP prices in Punjab have declined by up to Rs. 400 to 600 per bag in the past few days as the government expanded the crackdown on smugglers and hoarders in the fertilizer market, although the impact is marginal in the case of urea given its availability is in question.

DAP prices across Multan and Bahawalpur have fallen to Rs. 12,400 per bag from Rs. 13,000 per bag a few days ago and reports from Jhang, Okara and Bahawalnagar also indicate a decline to Rs. 12,500 per bag. Prices in D.I Khan and Muzaffargarh are reported down to Rs. 12,650 and 12,600 respectively. Urea prices in Faisalabad, Okara, D.G Khan, D.I Khan, Vehari and Khanpur have also declined from as high as Rs. 4,600 per bag to between Rs. 4,000 to Rs. 4,200 per bag.

How much the market is under pressure can be understood from the fact that these are the maximum reported prices. There are reports of urea being sold at even Rs. 3,800 per bag at places while DAP is even sold at Rs. 12,100 per bag below the MRP of Rs. 12,282 and Rs. 12,130 per bag notified by Fauji Fertilizers (FFC) and Engro Fertilizers (EFERT) respectively.

“Government had initially reached out to the fertilizer manufacturers and had pressured them to reduce the prices but after getting rebuffed by them, the government decided to pressure dealers and hoarders. The strategy largely has been to scare the hoarders into selling to cause price decline, and it worked”, stated a market consultant while talking to ProPakistani.

But he added that all this is temporary given the government will have to increase the gas prices by 45-50 percent sooner or later since IMF has already raised concerns over the delay in doing so to curb the mounting circular debt. He said if a gas price hike is notified by the end of the month or in October, the company prices will increase anyway nullifying the impact of these administrative measures.

Another question to be asked is that if the government was already aware of the culprits jacking up the prices at the expense of farming communities, why delay the action for months? Key agriculture inputs like Urea and DAP have been sold in the black market for months and now when the gas price hike and Rabi season demand is about to jack up the price anyway which will be conveniently transferred to the consumers, district administrations and the caretaker government has come down to check boxes.

On top of that, the impact is limited to only areas where local administration is sitting on top of the dealers & hoarders and shortages are still being reported in other areas where authorities have been lenient.

So even the short-term benefits are limited and there is no indication of any long-term policy-making from the government for the fertilizer industry to curb the black market as it has been formulating and implementing plans to curb speculators in gold & currency markets.

  • Fertilizer companies have their warehouses spread all over the country. Farmer can easily be provided fertilizer at MPR at the Factory warehouses. It used to be practice in the recent past that urea was kept available at the Factory warehouses where farmer after making payments in the Bank were issued. it’s not understood as to why farmers have been placed at the mercy of black marketeers to be looted.

    • In fact, manufacturers and dealers joined hands and created artifical shortage in the market to get price much higher than the M.R.P.

      • Sir, please correct your records… industry printed MRP on the bag. Dealers are not controlled by the industry and are monitored by the government functionaries. Shortage is due to closure of plants due to nonavailability of gas to SNGPL and SSGCL based plants.

  • Fertilizer industry has served Pakistani farmers well and saved Forex to the tune of USD 2.5 billion or so…. sustainability of this industry is key to success of green initiative.

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