The ECC also constituted a committee headed by Secretary Industries with representative from Finance Division and the Ministry of National Food Security after the first reduction of price from Rs 1785 to Rs 1310 per 50 kg bag to fuel the sale of imported urea stock available with the NFML.
The second downward revision in the price was approved by the ECC on September 26, 2016 - from Rs 1310 to Rs 1200 - against the recommendations of the committee to reduce the price of imported urea to Rs 1100 per 50 kg bag. Since then, the notified committee stated that it has held a series of meetings between September-December 2016 to push the sale as well as to monitor the progress of sale under the chairmanship of Secretary Industries and Production.
The committee noted that there was surplus stock of urea with the industry since Kharif 2016, and resultantly there was a surplus stock of 1.6 million metric tons with industry in Rabi 2016-17. The ECC was further informed that urea was always imported to overcome any shortage in the domestic market and imported urea was never sold in surplus market conditions.
However, during the surplus availability of urea, the local producers have been using various strategies to sell their product. These measures by the private sector include (i) continuous reduction in price of respective brands, (ii) credit sale, (iii) bearing the transportation cost, and (iv) heavy advertisement, etc and due to these adverse conditions, the NFML has been able to sell only about 13,000 metric tons till December 22, 2016.
The NFML had taken a number of measures after the approval of the committee constituted by the ECC and its Board of Directors to increase the sale of the commodity. These measures included dissemination of information through mass media regarding availability of imported urea at reduced price of Rs 1310 per 40 kg bag through NFML countrywide network; offering dealer''s price to the provincial agriculture departments; waiving off condition of registration with NFML against a security deposit with the condition to lift at least 200 bags with no restriction on maximum limit; incentives for marketing staff of NFML; sale of urea against bank guarantee with AA rating during the ongoing Rabi Season 2016-17; and imported urea stocks to be issued to dealers in lieu of their deposits who have opted to remain on NFML dealers network and, therefore, demanding return of their security deposits.
The committee noted that efficacy and chemical composition of the imported urea would be unaffected over a long period of time as certified by director soil fertility survey and agriculture soil and water testing laboratory, Lahore. The ECC was further informed that disposal of imported urea at the current price of Rs 1200 per 50 kg bag was very difficult and requested for further significant reduction in price to counter the aggressive marketing strategies of private producers.
The committee was also informed that by the end of December 2016, the industry would have sold an estimated 2.2 million metric tons of urea against estimated off take of 3.3 million metric tons for Rabi 2016-17. Thus the NFML target at the beginning for Rabi was 276,000 metric tons in an available demand of 3.3 million metric tons during the same period. In the remaining three months January-March 2017, NFML would be required to dispose of around 2,63,000 metric tons against the estimated balance demand of 1.1 million metric tons. As a result, the NFML task was three times more difficult as compared to the start of Rabi and any reduction in price should take into account this fact as well. As the current Rabi season was ending fast, the ECC was requested to reduce the price of imported urea stock of NFML to Rs 1000 per 50 kg bag. The ECC was told that on August 18, 2016 a proposal was moved by the Ministry of Industries and Production for reduction in the price of imported urea.
Copyright Business Recorder, 2017