LAHORE: Speculative pressures now seem to be the only operative word in the agriculture markets – both for inputs and outputs – that is multiplying prices, taking inflation to a kill level, and making lives miserable.

Fertiliser is now turning out to be the latest victim of the complete “lassie faire,” which has left the markets operating without any check, or administration intervention and at the complete mercy of the profiteers.

Both official and private calculations say that Pakistan would have sufficient urea to see it through the year and international prices dropping by the week; the buzzword in the Pakistan market, however, is “there is going to be a shortage, ranging between 200,000 to 800,000 tonnes, and its price spiralling beyond everyone’s financial reach.”

Pakistan has so far produced 3.7 million tonnes and its current inventory stands at 175,000 tonnes against the total yearly requirement of 6.5 million tonnes. It means that the country would need another 2.7 million tonnes in the next five months, which all market watchers think could be done easily if the average of the last seven months is something to go by. To cover any speculative shortfall, the federal government also allowed and allocated funds for the import of 600,00 tonnes.

The international price comparison makes the dropping trend clear. In August last year, the world price of per ton urea was $522, which this August has dropped to $390 – a slide of 25 per cent. The DAP (Di-ammonia Phosphate) has dipped by 49 per cent in the last year – from $925 per ton to $470 per ton. In Pakistan, however, it has doubled during the same period from Rs2,000 to the current close to Rs4,000 per bag – thanks mainly to speculative pressure and official inability, or unwillingness, to intervene and free the market of pressure that heats it.

“Four different company-declared prices are operating in the market right now,” says Khalid Khokhar of Pakistan Kissan Ittehad (PKI). It effectively means there is price uniformity or sanctity in the market: they range between Rs2,910 to Rs3,170 per bag. However, these company-declared prices are only for mentioning in documents and satisfying officials. The actual price is the fifth one on which it is being sold and it ranges between Rs3,800 to Rs4,000 per bag – depending on the area one purchases from. The mere fact of five operating prices means that the market has spun out of control of everyone. The farmers calculate that they would be paying Rs90 billion extra this year – in the shape of the differential between company-allowed prices and at the rate middle man and dealers are selling urea. This staggering amount would only benefit the middle man but hurt everyone else – from farmers to consumers – thanks mainly to official imperviousness to what is happening to people and their over-indulgence in politics, Khokhar concludes.

Published in Dawn, August 13th, 2023