Farmers blame smuggling, hoarding for urea crisis

LAHORE: The supply and pricing crisis of urea continues despite the window for its application to wheat closing fast. Farmers blame continued smuggling and hoarding and the industry holds panic buying mainly responsible.

There are reports from various areas of the province of long queues to purchase rationed and squeezed urea supplies by the district administration. In the open market, farmers claim partial availability of the fertiliser anywhere between Rs2,500 to Rs2,700 per bag.

“The only explanation here is hoarding and smuggling,” says Khalid Khokhar of Pakistan Kissan Ittehad (PKI). Though urea can still be applied to wheat during the next two weeks, but its efficacy may not be as encouraging as it was during the last two weeks. The agronomic pressure is not as severe right now as it was during the last six weeks, but queues are only expanding and the price is spiraling. It offers only two explanations; hoarding or smuggling, Khokhar insists. Both these possibilities prove the failure of governance and a lack of planning on the part of the government.

The industry on its part thinks panic buying is leading to market frenzy. “If the wheat window is closing, where is the fertiliser going? If the dealers hoarded it last month, why are they still holding it despite the closing wheat window? Where will they take it when the demand dips in the next two to three weeks? These questions need answers before one can reach any plausible conclusion,” says one of the manufacturers.

For the industry, panic buying has been keeping the market under pressure, affecting both supplies and prices. “The farmers are currently buying urea for the subsequent crops (maize, potatoes etc) and hoarding it for the fear of any future rise in price. Otherwise, the industry is manufacturing urea at normal pace and supplying it to the market as well. The farmers should take a break and let the stocks build up to a point where the market returns to normalcy,” he pleads.

“How much purchasing power do small farmers have in this country? Is it enough to absorb the entire manufacturing capacity of the industry? Some three to 4 per cent farmers may have the financial might to purchase urea as insurance against next crop, so blaming the entire crisis on this microscopic minority hardly makes sense,” says Abad Khan, a farmer from central Punjab.

“The government is basically denying urea smuggling to hide its failures. Currently, a bag of urea is selling at over Rs6,000 in Afghanistan and Iran. In Pakistan, it costs less than Rs2,000, leaving a margin of more than 200pc for smugglers. It is continuously disappearing across the border and the government is in denial. If the industry is producing the fertiliser, the farmers are not using it and hoarding does not make commercial sense because of a drop in demand then where is it? Farmers and their representative bodies have been pleading with the government for long to check its border administration. But instead, the authorities are content with being in a denial mode and giving the crisis a political angle — blaming it on the opposition.”-