November 22, 2011


Urea price hike causes Pakistan's wheat output down


Pakistan's wheat production may decrease by 30% due to continuous urea price hike as expressed by farmers which has kept an important input out of their reach.


Against the actual price of PKR1,603 (US$18.38), a urea bag of 50 kilogrammes was available at PKR2,100-2,200  (US$24.08-25.23) in the black market, complained farmers.


"Prices of urea, electricity, fuel, pesticides and seeds increase many times every year, making them unaffordable for the farmers," said Arshad Mahmood, a farmer. Wheat sowing has already started and farmers were facing difficulties in purchasing urea, he said, adding they were worried that high urea prices would reduce their margins.


They apprehended that prices may increase up to PKR2,400 (US$27.52) per 50-kilogramme bag by next week. "Black marketing and over-charging have become a routine and the government seems to have failed to address the problem," a farmer said.


"Suspension of gas supply to fertiliser plants has caused shortages, pushed prices up and encouraged black marketing," said Hameed Ahmad, District Officer Agriculture Department Faisalabad while talking to The Financial Daily.


However, he said if Sui Northern Gas Pipelines Limited (SNGPL) fully restored gas supply to fertiliser plants, urea crisis may be resolved.


Ahmad said urea demand was increasing, resulting in its shortages and in order to bridge the gap the government was importing 700,000 tonnes of urea. The agriculture department has registered 70 cases of black marketing and over-charging in Faisalabad and monitoring teams were trying to stop the practice, he added.


"Energy crisis is continuing to damage the economy as suspension of gas supply has led to severe urea shortage this Rabi season, badly affecting wheat cultivation," said Tariq Gill, a grower.


He sought government's subsidy and cited the example of India where urea price was at a maximum PKR600 (US$6.88) per bag.


Last year, urea price stood at PKR1,000 (US$11.47) per bag, showing a hike of more than 60% this year. "Farmers usually use two bags of urea per acre and their cost of production will increase compared to last year," said Gill.

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