PAKISTAN’S demand for main plant nutrients — nitrogen, phosphate and potash — is rising, but the government lacks an effective fertiliser policy to spur agricultural growth.

The country’s per acre yield of wheat, rice and other grains and cereals needs to increase, and according to the just-published FAO report ‘World Fertiliser Outlook,’ the demand for nitrogen fertiliser in Pakistan is expected to rise by 4pc by 2018, while its demand is projected to rise by 18pc in China and 17pc in India. In the case of phosphate, the demand will increase by 3pc in Pakistan against 27pc in India and 10pc in China.

Domestic fertiliser production has been hit by natural gas shortages, and the demand is being met through imports. After the success of the fertiliser policy in 1989, which assured reasonable prices of fertiliser to farmers (below the import price) and brought substantive investment to enhance domestic production, the government launched another policy in 2001, mainly to attract investment in the industry.

That policy has lost its relevance due to the shortage of natural gas, as the government has not revised it even after a span of 14 years despite the fact that the country’s agricultural productivity is much below its potential and it is losing its share in foreign markets, particularly for rice and wheat, whose domestic prices are higher than those in the international market.

The National Fertiliser Development Centre is quietly functioning in the planning commission, whose project director, Jalil Marwat, feels the need for a new fertiliser policy. He says that with alternative sources of energy like LNG coming up, the domestic fertiliser industry is expected to be revived.

The National Fertiliser Development Centre’s project director, Jalil Marwat, says that with alternative sources of energy like LNG coming up, the domestic fertiliser industry is expected to be revived

However, an assessment of the fertiliser development centre indicates that the application of fertilisers during 2014-15 is likely to fall to an estimated 4m tonnes, against the sale of 4.1m tonnes during 2013-14. The main reasons for the decline are attributed to less investment by farmers owing to low market prices of sugarcane, rice and cotton.

Pakistan’s domestic fertiliser production is 3.1m tonnes, against the average demand of 4m tonnes. The gap of 0.9m tonnes is met through imports. The urea production capacity has been estimated at 6.3m tonnes, and if the full supply of natural gas is ensured, the country can produce at least 5m tonnes, according to the NFDC.

Out of 20 urea plants, 18 are operating below their capacity, while two units have been closed for the past one year due to gas shortages.

According to the NFDC, gas supply to fertiliser plants has started to improve lately.

According to the FAO report ‘World fertiliser trends and outlook to 2018,’ “the global capacity of fertiliser products, intermediates and raw materials will increase further”.

As the potential to produce fertiliser will outpace its use, the global potential balance — the amount available over actual demand — will grow for nitrogen, phosphate and potash, the main three soil fertilisers.

Global use of nitrogen, by far the largest fertiliser base, is projected to rise 1.4pc each year through 2018, while phosphate use will increase 2.2pc and potash 2.6pc. In comparison, the supply of those three critical farm inputs is expected to grow by 3.7pc, 2.7pc and 4.2pc per annum, respectively.

The report does not forecast future price trends, but notes that fertiliser prices, after surging in 2011, were broadly lower in mid-2014 than in 2010.

Published in Dawn, Economic & Business, February 23rd , 2015

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