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Fertilizers production rises 2.6pc over last fiscal; offtake on the decline

According to the food and agriculture organizations of the United Nations, the world fertilizer nutrient consumption was predicted to reach 186.6 million tonnes in 2015, up by 1.1 percent over 2014. World demand for total fertilizer nutrients was also predicted to increase at 1.6 percent per annum from 2015 to 2019. The demand for nitrogen, phosphate, and potash is forecast to increase yearly by 1.2, 2.0 and 2.5 percent, respectively, during the period under review.

Over the next five years, experts revealed in the report that the global capacity of fertilizer products, intermediates and raw materials will be raised more. The global total nutrient capacity was recorded at 284 million tonnes during 2014, out of which the total supply was 240 million tonnes. During 2015, the total capacity was predicted to rise by 2.9 percent and supply would increase by 1.6 percent.

Over the next 5-year, worldwide capacity and production of fertilizers would rise further. In the developing countries like Pakistan, the fertilizer is contributing 30 to 50 percent in the crop yield and it is the most important as well as expensive input in Pakistan. Furthermore, the experts recorded that in the cost of production of major crops, the share of fertilizer is recorded approximately 10 to 15 percent. Pakistan statistics explicated that the local production of fertilizers during July-March, FY2019 rose by 2.6 percent over the corresponding period of last year. This rise is because of functioning of two urea manufacturing plants as supply of LNG was available on subsidized rates. Ministry of Finance showed that the supply of imported fertilizer rose by 4.8 percent. Therefore, total availability of fertilizer rose by 3.2 percent during FY2018. Total offtake of fertilizer nutrients were declined by 7.3 percent. Nitrogen offtake also declined by 2.89 percent and phosphate by 18.2 percent. Potash offtake registered a rise of 4.55 percent during FY2019.

The government officials also revealed that reduction in fertilizers offtake was chiefly because its high prices, despite receiving subsidy from the government. It is also recorded that there are dissimilar type of subsidies offered during FY 2019 such as the government ensured sufficient supplies of urea in Rabi season by offering a subsidy of Rs. 1,292 per bag for 105 thousand tonnes of imported urea.

 

For the implementation of uniform tax rate of 2 percent for all type of fertilizers, the government has presently operationalized two fertilizer plants, placed at SNGPL network, by offering Rs. 916 per bag of urea subsidy for using LNG and local manufacturers have also subsidized Rs.714 per bag of urea as the Government of Pakistan offered cheaper feed gas. Statistics also explicated that total availability of urea during Kharif FY2018 was 3.014 million tonnes comprising of 316 thousand tonnes of opening inventory and 2.698 million tonnes of domestic production. Urea offtake was about 2,887 thousand tonnes, leaving inventory of 115 thousand tonnes for Rabi FY2019. Availability of DAP was 1.627 million tonnes comprising of 190 thousand tonnes of opening inventory, 1.063 million tonnes of imported supplies and 374 thousand tonnes of local production. DAP offtake was 901 thousand tonnes leaving an inventory of 729 thousand tonnes for Rabi FY2019.

The Finance Ministry also revealed that Rabi during FY2019 started with an opening balance of 115 thousand tonnes of urea. Local production during Rabi FY2019 was 2.923 million tonnes. Urea offtake during Rabi during FY2019 was 3.033 million tonnes, against 3.143 million tonnes of total availability, leaving a closing balance of 135 thousand tonnes for next season. DAP availability was 1.762 million tonnes, which included 729 thousand tonnes of opening inventory, 679 thousand tonnes of imported supplies and local production of 354 thousand tonnes. Offtake of DAP during Rabi season was 1.164 million tonnes, leaving a balance of 599 thousand tonnes for next season.

Fertilizer supply demand situation in Pakistan (000 Tonnes)
DescriptionKharif (Apr-Sep) 2018Rabi (Oct-Mar) 2018-19 Kharif (Apr-Sep) 2019
Urea DAP DAP Urea DAP
Opening stock316190115729135599
Imported supplies01,06310567910018
Domestic Production2,6983742,9233543,217360
Total Availability3,0141,6273,1431,7623,452977
Offtake/Demand2,8879013,0331,1642,942865
Write on/off-12325100
Closing stock115729135599510112

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