Choking farmers’ lifeline

LAHORE: Pakistan’s wheat crop is under threat, as the farmers are facing acute shortage of urea since the start of the sowing season.

However, the government claims surplus availability of the commodity but the growers fear the persistent shortages will also hit the sugarcane and maize crops, which they termed a bad omen for the sugar and poultry sectors.

Federal Minister for Industries and Production Khusro Bakhtiar on January 7, 2022 ruled out the shortage of urea in the country, assuring additional supplies from January 10, 2022.

“At present, around 350,000 bags of urea were being produced on a daily basis, which would be enhanced to 440,000 bags from January 10, 2022,” he said.

Despite the government’s claims, the farmers are still paying Rs2,500 to Rs2,700 for 50kg bags as against the officially fixed rate of Rs1,768.

Pakistan Kissan Ittehad Chief Khalid Khokhar, while talking to BOL News, said that there is no reality in the government’s claims of surplus production.

“The local production of urea is 6.5 million tonnes and the consumption is almost the same. There will be a shortage of urea if some quantity is hoarded or smuggled. We sent a timely warning to the government but there was no response,” he said.

Aamer Hayat Bhandara, a progressive grower, said that the farmers were the ultimate sufferers of the government’s mismanagement.

“Yes, there are multiple causes of supply and demand gap. People are even accusing farmers of panic buying. It could be true to some extent, as the majority of smallholders do not have enough money to do that. They stand in queues for hours just to get a couple of bags of urea after verifying themselves as farmers. Yes, the middleman could afford to purchase additional quantities for more profit in the days to come,” he said.

Keeping the growers in queues for hours just to give them important input was a big injustice. Such practice could pose local and internal security challenges.

The persistent shortage of urea and its supply to growers from trucks could create a law and order situation, Bhandara added.

Referring to the demand of deregulating the fertiliser sector, he said, he has never seen the sale of any fertiliser at the officially fixed price.

“The price has always been high for the farmers. Before the sowing of the Rabi crop, the price of DAP reached Rs8,000/bag. At the start of wheat sowing season, urea first disappeared and was later available at a price of Rs2,500 to 2,700/bag instead of Rs1,768.”

The stallholders needed important inputs at an affordable price, he added.

“The farmers are already under debt due to an increase in the cost of diesel, electricity and the overall inflation. Many of them could not even apply phosphorus fertiliser,” Bhandara said.

“The farmers are least interested in the news of hoarding, smuggling and announcements of increasing fertiliser supply. Curbing the menace of hoarding and smuggling is the responsibility of the government. The farmers just demand availability of seeds, pesticides, fertilisers and other agricultural inputs at the officially fixed rates,” he added.

The unavailability of important inputs at officially declared rates could lead to a food crisis in the future.

“Wheat production is likely to drop due to the urea shortage. It can lead to a food crisis.”

Meanwhile, representatives of the grower bodies and corporate farmers attributed the urea shortages to less production, owing to closure of two plants at a crucial time, additional demand in the wake of panic buying, five times higher world prices, which led to hoarding and smuggling that led to price hike.

As a short-term measure, the government has started providing adequate gas to the industry that would help produce around 600,000 tonnes of urea/month, going forward, with an opening stock of 50,000 tonnes.

For bridging the supply-demand gap, the government has asked the manufacturers to increase their daily supply in the market by 50,000 bags to 450,000 bags.

In addition to production and increase in supply, the government is importing 100,000 tonnes of urea from China to ease the supply pressure.

The first shipment of 50,000 tonnes of urea will reach Pakistan next month that will help ease the supply pressure.

As per the officials, the growers have resorted to panic buying, hoarding of fertiliser for sale in the coming weeks.

The major reason for the shortages remains its hoarding for quick and higher returns and smuggling to Afghanistan, owing to a five times price differential between the local and international markets.

At the current international rate, a trawler of urea yields additional profits of around Rs7 million if sold out of the country, an official said, adding that it was not a bad incentive for the smugglers.

As per a report, around 350,000 tonnes of urea has been smuggled to Afghanistan. The Federal Cabinet has accused the Sindh government of not cooperating to control smuggling. Endorsing the argument, a progressive grower from Khanewal said that it may be true. But it is the federal government that controls borders. “Why didn’t it take action to stop smuggling and hoarding when the farmers started complaining of shortages at the start of the wheat sowing season?” he asked.

“Timely action could have prevented the crisis,” he added.

While imports may assist the government in overcoming the crisis, the industry says the long-term solution to the issue lies in reducing the gap between domestic and international prices.

“Studies suggest that Pakistan is short of gas but not for low BTU gas used for manufacturing urea. As a long-term strategy, the government should maximise allocation of low BTU gas for the fertiliser sector. This will ensure adequate availability of the locally-manufactured urea and even export of surplus quantity,” said an executive of a urea manufacturing company on the condition of anonymity.

Khalid Khokhar said that the government functionaries are terming the shortage of urea a mere propaganda.

“The relevant minister termed the fears of shortage mere propaganda. Our repeated pleas to keep agriculture out of politics fell on deaf ears. Now everyone is seeing the disastrous results,” he added.

“Gas disruptions during summer dent the production. Two plants went offline that caused massive damage. As such the crisis was well insight but the government was least bothered,” he said, adding that the government’s mismanagement worsened the situation. The industry increased urea supplies to its dealers but the entire quantity was hoarded, Khokhar said, adding that the government resorted to usual tactics of raids on suspect premises but the situation did not improve even after registration of more than 500 cases against the hoarders.

The hoarded stock started slipping to Afghanistan due to higher prices there. Smugglers had the luxury of throwing enough money to cross truckloads of urea through porous borders due to five times more prices and; thus, earn huge profit margins.

A reduction in the wheat yield is imminent due to less use of DAP and urea that could pose a food security threat. Possible Ukraine-Russia war would only worsen the crisis, Khokhar, who is also a progressive farmer, feared.

The consequences of urea shortage would last longer than the current crop cycle.

“The fear now extends to sugarcane and maize, which will need urea in the next few weeks. What if the crisis persists and affects both these crops? Less yield of these crops will affect the sugar and poultry sectors,” he added.

Aamer Hayat Bhandara said that the persistent urea shortage could also affect the sugarcane and maize crops, which would ultimately affect the poultry and livestock sectors.

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