fertiliser manufacturers increase prices despite steady gas subsidies


Published on: May 29, 2024.

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Fertilizer Prices in Pakistan Continue to Rise, Concerning Farmers

In recent months, farmers in Pakistan have been increasingly worried as fertilizer prices continue to surge. Despite government subsidies on natural gas, a critical component of fertilizer production, industry sources reveal that some manufacturers receiving subsidized gas have quietly raised urea and other fertilizer prices. These price hikes are intended to align with the prices of imported fertilizers, but they are squeezing the profit margins for farmers and the government’s control over these increases seems to be diminishing. As a result, farmers and crop yields are severely impacted.

The rising costs of essential fertilizers are burdening farmers significantly, even though there have been no corresponding increases in production costs. The subsidized gas, which was meant to keep fertilizer prices low, has not deterred manufacturers from raising prices. This phenomenon exacerbates the financial strain on the agricultural sector and threatens to decrease crop yields, potentially affecting the broader food supply chain.

Both industry experts and farmers are now calling for stronger government intervention to regulate fertilizer prices and protect the agricultural industry from further economic distress. These skyrocketing costs pose a significant challenge to farmers and threaten agricultural growth.

Agriculture is a vital contributor to Pakistan’s GDP, but it is under strain due to the rising urea prices that are impacting crop yields and inflating production costs. According to the Pakistan Bureau of Statistics (PBS), the price of this crucial agricultural input has surged by over 55 percent over the past year.

In late April, fertilizer manufacturers unilaterally increased urea prices by Rs550 per bag, prompting the government to intervene and demand a rollback. However, the manufacturers did not reverse the price hike, and the product continues to be sold at high prices, posing a significant challenge for farmers. PBS data indicates that as of the week ending May 23, 2024, the prices of various fertilizers have increased by up to 55.3 percent compared to the same week last fiscal year.

Farmers are urging the government to take stronger action to control fertilizer prices and support the agricultural sector in the face of these rising costs. Many poor farmers are forced to leave their fields uncultivated or use fewer fertilizers than necessary, resulting in consistently low yields. Despite Pakistan having the world’s largest canal irrigation system, the average crop yields are significantly lower compared to global rankings.

The financial challenges for farmers have worsened as the government has increased power tariffs for agricultural tube wells, compounding the impact of rising fertilizer prices. Both electricity and fertilizers are vital for crop yields, and their increased costs are likely to further harm agricultural productivity.

The agriculture sector in Pakistan has struggled in recent years, leading to hardships for farmers and threatening agricultural growth. With the increased costs of key inputs, the situation is expected to deteriorate further, impacting farmers’ finances.

Source: [The News](https://www.thenews.com.pk)