MPs demand end to fertiliser subsidy

While proposing a massive crackdown on the fertiliser mafia, members of parliament have proposed an end to the subsidy for urea manufacturers through setting uniform gas supply prices.

A high-level committee, constituted by Prime Minister Shehbaz Sharif, met at the Ministry of National Food Security and Research on Friday to discuss the price and availability of fertiliser.

Sources told The Express Tribune that committee members and parliamentarians proposed a significant reduction of Rs1,800 in urea price to Rs3,700 per 50kg bag compared to the existing market price of Rs5,500.

They asked the government to expedite the import of 0.2 million tons of urea which could be released in the market as an intervention measure to control prices.

They also recommended government-to-government deals with different countries to ensure the speedy import of urea.

The PM had constituted an 18-member committee to review the functioning of the fertiliser supply chain and the prevailing prices.

The committee’s mandate included a probe into the alleged malpractices by dealers, black market and smuggling, and suggesting measures to effectively control and curb the misconduct.

In light of the existing subsidy mechanism, the committee would suggest a foolproof mechanism for the provision of direct subsidy to farmers by leveraging technology.

It would also assess the impact of gas tariff reforms on fertiliser pricing, the agriculture sector as well as farm productivity and income, and would recommend mitigating measures.

It would identify legal, regulatory and policy issues having a bearing on challenges in the fertiliser sector and propose interventions to synergise with gas price reforms in order to mitigate the impact on fertiliser prices.

It was agreed that the National Fertiliser Development Centre (NFDC) of the National Food Security and Research Division would provide secretarial support to the committee, which would submit its recommendations within four weeks.

The committee held its maiden meeting on Friday. A food ministry spokesperson, in a statement, said that the purpose of the meeting was to take stock of the fertiliser supply chain and pricing issues.

NFDC chairman briefed the committee on urea availability and market prices.

Federal Minister for Industries and Production Rana Tanveer Hussain said that the government was ensuring uninterrupted supply of urea in the Kharif sowing season and an integrated and effective strategy was being developed to control the black market.

He pointed out that the government had allowed the import of 0.2 million tons of urea to ensure the smooth functioning of the supply chain. In that regard, the Economic Coordination Committee (ECC) and the cabinet had given the go-ahead.

The Ministry of Industries was striving to import fertiliser at reasonable rates with the cooperation of both federal and provincial governments, he stressed.

“Protection of farmers’ interests is our first priority,” Hussain said, adding that various proposals were presented by the members of parliament.

He revealed that complaints were being received that fertiliser companies and dealers were forcing farmers to buy di-ammonium phosphate (DAP) with urea.

Companies and dealers would have to scrap “this tie-up sale” model, meeting participants said, adding that dealers should be bound to ensure transparency in the delivery of fertiliser.

Parliamentarians emphasised that the fertiliser industry should provide urea without any interruption to farmers at reasonable prices and the exploitation of growers was not acceptable in any case.

The industries minister directed the secretary to meet with fertiliser companies for streamlining the supply chain and delinking DAP with urea purchase.

Second meeting of the committee will be held soon where final recommendations will be presented.

Published in The Express Tribune, May 25^th, 2024.

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