Islamabad - Despite providing subsidy and relaxation in GST to fertilizer sector, the prices of DAP and Urea in Pakistan are much higher as compared to the other south Asian countries.

The price of 50Kg DAP bag in Pakistan was Rs 2588 in April, which was 57.61 percent or Rs 946 per bag higher than Bangladesh and 31.64 percent or Rs 622 per bag higher than India, said the Pakistan Economic Survey 2016-17. The prices of DAP in Bangladesh and India are Rs 1642 and Rs 1966 per bag respectively.

Similarly, the price of Urea which was Rs 1368 per bag was also much higher than India and Bangladesh. The price of Urea in Pakistan was 163.07 percent or Rs 848 higher than India, while from Bangladesh it was 30.16 percent or Rs 317 per bag higher. The prices of Urea in India and Bangladesh are Rs 520 and Rs 1051 per bag respectively.

Although the prices of fertilizers decreased in Pakistan during the tenure of the present government but still it cannot match the prices in the neighboring countries. In 2011-12, the price of DAP was Rs 4054 per bag which was decreased to Rs 2588 in April. Similarly, the price of Urea was decreased from Rs 1711 in 2011-12 to Rs 1368.

Although on one hand the government claims to provide relief to the farmer as it is charging 5 percent GST on urea but on the other hand the same farmer is being burdened with the imposition of high rate of GST on HSD. Currently, the government is charging around 30 percent GST on High Speed Diesel which is mainly used in agriculture sector.

The survey further said that agriculture is the lifeline of Pakistan’s economy accounting for 19.5 percent of the gross domestic product, employing 42.3 percent of the labour force and providing raw material for several value-added sectors. Fertilizer is the most important and expensive agricultural input. Its contribution in increase in crop yield is from 30 to 50 percent. “Almost all of our soils are deficient in nitrogen, 90 percent soils have deficiency of phosphorus while 40 percent are deficient in potash. The domestic production of fertilizers during 2016-17 (July-March) decreased slightly by 0.3 percent over the same period of last fiscal year,” the economic survey reported. The imported fertilizer also decreased by 5.8 percent. Therefore, total availability of fertilizer also decreased marginally by 1.5 percent during current fiscal year, the survey added.

The economic survey said that the total offtake of fertilizer nutrients witnessed increase by 30.5 percent. Increase in offtake of fertilizer is due to substantial reduction in prices of all fertilizer products as a result of subsidy announcement by the government in June, 2016 which includes cash subsidy on phosphate fertilizer equivalent to Rs. 300 per 50 kg bag of DAP, reduction in GST on urea from 17 to 5 percent, cash subsidy on nitrogenous fertilizer equivalent to Rs156 per 50 kg bag of urea, the survey maintained.

Regarding the availability of fertilizer during Kharif, the report said that total availability of urea during Kharif 2017 will be about 4018 thousand tonnes comprising of 1318 thousand tonnes of opening balance and 2700 thousand tonnes of domestic production. Urea offtake is expected to be around 3000 thousand tonnes, reflecting a closing balance of 1018 thousand tonnes. Total availability of DAP will be 639 thousand tonnes against expected offtake of 900 thousand tonnes. Thus, there is gap of 261 thousand tonnes of DAP which should be met through imports by private sector.

Regarding the prices of essential consumer items prevailing on 27th April 2017 in Pakistan, the economic survey said that that in comparison with the regional countries Pakistan is the lowest in 10 items out of 23 items like wheat, wheat flour, chicken farm, petrol, diesel, rice basmati, vegetable ghee, eggs, beef and sugar than those of other regional countries. Second lowest in 7 items like gram pulse, milk fresh, masoor pulse, moong pulse, mash pulse, red chilies, onion and third lowest in 6 items like mutton, tomatoes, potatoes, DAP, tea and urea.