Fertilizer shortage and costliness

Fertilizer shortage
By Tahir Ali

Dawn November 7, 2011


FERTILISER ordered by growers in remote areas in Khyber Pakhtunkhawa often does not reach its destination and is off-loaded in closer vicinity to cater to the demand of farms located nearer to the supply depots.

“For instance, a consignment of fertilizer booked by Buner farmers does not reach its buyers and is unloaded in a supply depot somewhere in Mardan and sold off there. While fertilizer companies are believed not to be directly involved in this practice, the dealers are, especially in case of supplies to far-off northern areas of KP, FATA and and Gilgit Baltistan. The issue, despite its serious implications on agriculture and consequently on growers and crop yield, still remains unattended,” says a farmer.

“Fertilizer companies favour financially stable dealers who can invest heavily in the business. Those who are rich and have strong connections can get as many licences for different places as desired by them. They can create artificial shortage anytime, anywhere to increase prices and earn a lot of money within no time,” said a dealer.

“Fertilizers have an impact of around 30 per cent on yield and quality of crops and their inadequate use affects quality and per acre crop yield. In case of shortage, fake fertilizers are sold at cheaper rates which reduce crop yield,” says farmer Israr Khan.

The total consumption of urea and DAP in the province is 250,000 and 150, 000 metric tons for Rabi and 180,000 and 150,000 metric tons for Kharif respectively.

The prices of DAP per bag during the last two years have jumped from Rs2,600 to Rs4,300 and that of urea from Rs1,400 to over Rs2,300. It works out to an annual additional burden of around Rs12 billion on the KP farmers for DAP alone.

According to Haji Naimat Shah, another farmer, the increase in prices of fertilizer is getting out of growers’ reach. “If the government does not withdraw general sales tax and open more stores in all the 986 union councils in the province, food grain output would be severely hit.”

“The agriculture department, despite being authorized under the Fertilizer Act, has failed to check market manipulation, and the sale of fake and spurious varieties.

“Provincial quotas and provincial supply bodies need to be revived. The agriculture department should devise a strong monitoring system and subsidies should be given directly to farmers rather than to fertilizer companies as they do not pass it on to growers,” he demanded.

The private sector handles about 90 per cent of urea and 100 per cent of DAP, Khan said.

The profits of the fertilizer companies is ballooning, year by year, because of the rapid increase in fertilizer prices with no effort to improve plant productivity and efficiency. The industry gets heavily subsidized gas used by it when compared to international energy prices.

Deregulation and self-sufficiency, it was believed, would bring down prices of the commodity but the opposite is the case.

Imperfect competition and profiteering create an environment where benefits accrue to only a few, but costs are borne by all.

According to an official of the KP ministry of agriculture, the department conducts routine and monthly surprise visits. The offenders are arrested and tried in court of law, they are convicted and their licences are blacklisted, but the offence still continues. The province has only two big depots of the National Fertilizer Marketing Limited. More such stores are needed to be opened in the province to protect farmers against fertilizer mafia, he said.

In June 2003, the NFML had 211 urea dealers in KP but the number has shrunk to 22 only, the federal minister for industries told the Senate last year. There is no dealer in the tribal belt.

About Tahir Ali Khan (Official)
I am an academic, columnist, and a social worker.

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