The rosy picture shows a healthy growth in the use of urea by the agricultural sector and the inclination of the ordinary farmer towards scientific methods to increase productivity.
The indigenous urea production at 3.4 million tons was up 7 percent from 3.2 million tons achieved last year. Anticipating the shortage the government imported 0.35 million tons that has been sold quickly. The domestic price of urea during the third quarter was about 52 percent below the cost of imported urea or approximately Rs 500 for a 50-Kg bag.
The demand for phosphates has also increased as the sales volume for the nine months to September 2005 was 0.78 million tons, up to 30 percent compared to 0.64 million tons for the same period in 2004. The increase in demand is attributed to better farmer liquidity, better crop economics and some pre-buying by the dealers.
The source informed the Business Recorder that the fertiliser sector had realised the forthcoming shortage of urea and had requested the government to act swiftly to control the expected shortage.
The advice was not taken seriously by the government and the expected shortage occurred.
The government acted by importing urea from abroad. Urea prices in the international markets have continued to remain high and at current prices the imported urea will cost over Rs 900 compared to 479 for a 50-Kg bag for the locally produced product.
The government countered this new phenomenon of the higher prices by giving subsidy to the farmers to bring the price down. The International Monetary Fund (IMF) disliked the idea and asked the government to stop this practice.
The current situation requires prompt action and the plans to start the urea production in the shortest possible time. As already appeared in the Business Recorder, the Economic Co-ordination Committee (ECC) has allocated 100 MSCFD gas for the fertiliser sector from the Qadirpur gas field for setting up of a new world class ammonia/urea plant. This requires expediency from the government to realise the situation and complete its obligations in the shortest possible time.