INTERVIEW
KHALID SIRAJ SUBHANI CEO (DESIGNATE) ENGRO FERTILISER

'REAL AGRICULTURAL POTENTIAL YET TO BE EXPLORED'

AMANULLAH BASHAR
(feedback@pgeconomist.com)
May 31 - June 6, 20
10

Subhani is a Director on the Boards of Engro Corporation Limited, Engro Fertilisers Limited, Engro Vopak Terminal Limited, Engro EXIMP Private Limited and Engro Polymer & Chemicals Limited. He has also served as Chairman of the Board of Avanceon in the past.

He began his career in the Manufacturing Division at Exxon Chemical Pakistan Limited in 1983 and has held a variety of leadership roles within the Company, including long-term assignment with Esso Chemical Canada. He has served as Manager for New Projects, General Manager for Operations, Vice President for Manufacturing and Senior Vice President for Manufacturing and New Ventures.

Subhani is a member of the Pakistan Engineering Council, Faculty Selection Board, Institute of Business Management, Sukkur, and Standing Committee on Environment of Federation of Pakistan Chambers of Commerce & Industries. He has also been a member of Federal Government's Committee on Dawood Engineering College rejuvenation and American Institute of Chemical Engineers. Graduated from NED University of Engineering and Technology, Pakistan with a degree in Chemical Engineering Subhani has completed programs on advance management from MIT and Hass School of Business Management, University of Berkely, USA. He and his wife have two daughters and a son.

Khalid Subhani said the real agricultural potential of Pakistan is yet to be explored.

People have started saying that urea based food is affecting the human health and a source of various health issues. When asked to comment on this perception, Khalid Subhani with a broad grin on his face said such remarks are invalid and carry no weight. What is the function of Urea? He asked and came out with reply himself. Primarily the function of urea is to provide a balanced diet to the soil and the crop; hence, all three major nutrients including Niterogen, phosphorous and Potash are blended into one nucleus in a proportion suitable for specific crop. Balanced fertilisation improves efficiency of the soil to produce a healthy crop. Apart from its role to produce a healthy crop, it has assumed the role of a savior in the face of fast growing global population. Imagine how you would meet the food requirement with conventional methods. "Without using this agriculture friendly means the world must have entangled in acute food shortages."

Giving his expert opinion on agriculture potential of the country Subhani pointed out certain areas including effective use of water according to need of the soil are vital to produce desired agriculture produce.

He recalled the draught like conditions created by poor rainfall some three or four years back caused fears for negative growth in the productions of the major crops. However, the farming community harvested bumper crops at the end of that particular year as the water shortage forced minimum use of water. Actually excessive use of water is a myth for better yields. In fact effective water use in accordance to the need of the soil and the crop is of primary importance to have better yields.

This concept has successfully been applied in many countries to reap better crops especially in Saudi Arabia where sprinkles are used for watering the crops. Hence, there is a need for a campaign to create awareness among the farming community. Similarly, the same method is also applied in case of fertiliser and pesticides as the excess of even a good thing can prove counter productive, Subhani remarked.

When asked what Engro is doing for creating awareness among the farmers regarding effective use of water, fertiliser and pesticides, Subhani said with a smile that we are constantly holding seminars and field demonstrations by specialised teams in different parts of the country. In order to demonstrate this point of view Engro experts select certain areas adjacent to other agriculture fields where the Engro teams use the required amount of urea, pesticides and water and the results are always better compared to the conventional methods of farming.

ENGRO CONTRIBUTION TO THE ECONOMY

WEALTH DISTRIBUTED (RS MILLIONS)* 2007 2008 2009
To Govt (Taxes, duties, development surcharge) 5,890 5,032 5,221
To Employees 1,050 1,411 1,565
To Society (Donations to HSE & Natural Disaster) 41 42 49
*by Engro Corp, formerly Engro Chemical

We are also using FM radio to educate and provide guidelines to the farmers. He said that Engro has established two state of the art soil testing labs in Multan and Hyderabad which facilitate the farmers across the country for free soil testing. A total 9500 soil samples were analysed during 2008-09 he said.

UREA PRODUCTION

Currently Pakistan is a net market of around 6.5 million tons of Urea. The shortfall of 6 or 7 lakh tons is met through imports which means that the demand is largely met by the domestic industry. Of the total Engro Urea is producing one million tons of urea. However, it is expanding production capacity with an additional capacity of 1.3 million tons at a plant with an investment of $1.1 billion which will be online within a couple of months.

MARKET SHARES

PRODUCT 2008 2009 2010-PROJECTED
ENGRO Urea 19% 14% 20%
ENGRO DAP 14% 18% 17%
Potash 51% 67% 52%

Khalid Subhani said that with this new plant at Dharki the overall urea production of the country would be sufficient rather surplus to meet the demand; however this would be for a short period of time in the face of ever increasing demand for Urea. Talking about significance of on time availability urea, Subhani strongly recommended that in order to ensure food security there is a need for inventories of urea to avoid any shortfall that can prove costly to the food security. There is a room for furthering the volume of production in Pakistan.

NATURAL GAS

Natural gas is the basic raw material for fertiliser industry; its uninterrupted supply is of paramount importance for the fertiliser industry. When asked to comment on the current energy crisis especially the natural gas which heavily occupies the energy basket in Pakistan, he agreed that the future of urea industry is linked with the natural gas and the prevailing shortage calls for diversifying sources of gas supplies. In the wake of fast depleting existing reservoirs in Balochistan situation demands for accelerating the pace of development of gas fields on war footings not only in Balochistan but also in the rest of the country. In order to reinforce gas supplies Pakistan should also look for exploring possibilities for import of gas either in the form of LNG or through pipeline from Iran as the economic future is critically associated with the energy resources.

When his attention was drawn towards huge coal reservoirs at Thar which can be used for gasification he agreed for early development of Thar coal field in the interest of economic future of Pakistan. In fact, Engro has already signed an agreement with the government of Sindh for setting up joint venture power plant at Thar. Besides that, another power plant of 235mw has already gone into operation at Qadirpir.

AGRICULTURE INDUSTRY

Highlighting the role of agriculture industry, Subhani said that agriculture sector contributes some 22 per cent to the GDP besides generating employment opportunities to the tune of 44 per cent of the total employed labor force in the country.

Though over 30 per cent of the total area in the country is under cultivation i.e. 23.7 or 79.5 million hectares, which is supported by extensive irrigation system, yet there is an ample room for water management, and value addition of the agriculture produce. A huge quantity of fresh vegetable and fruits goes into waste for non-availability of preservation, transportation, and processing plants for value addition despite having a huge market available in the vicinity of this region especially the Arab world. The economic policy makers are required to focus on capitalisation of the available agriculture potential in the agriculture sector.

Despite an extensive irrigation network, the average yield (kg/hectare) especially of major crops including wheat, rice, cotton, sugarcane and maize is 12 to 65 per lower than world average which indicates lower production against its real potential.

PER HECTARE YIELD IN KILOGRAM (INDIA-PAKISTAN)

Yield in (kg/ha)

. WHEAT COTTON RICE SUGARCANE MAIZE
Pakistan 2585 713 2346 48634 3610
India (average) 2709 1290 3283 68279 2190
Delta -5% -45% -29% -29% -65%

He suggested that this gap could be improved through effective planning and improved farm practices transforming Pakistan's agriculture industry into a source of foreign exchange earnings.