Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC), a body of fertilizer manufacturers, has opposed the import of di-ammonium phosphate (DAP) fertilizer through the Trading Corporation of Pakistan (TCP) and warns it will hurt farmers and domestic industry alike.
The Economic Coordination Committee (ECC) has recently allowed TCP to facilitate the import of DAP without any financial burden on the government.
However, in a letter to the Ministry of Commerce, FMPAC has raised serious concerns over the approval of DAP import through TCP.
According to the letter, “the approval of such an important subject without consultation with the stakeholders is to the utter dismay of the fertilizer industry. The industry has been ensuring timely availability of fertilizers through competitive bidding at the opportune time over the past several years”.
FMPAC Executive Director Brig (Retd) Sher Shah Malik said that “it is important to examine the implications of the proposal to the fertilizer supply chain in order to avoid subsequent complexities”.
“The intervention of TCP in phosphatic fertilizer imports will have damaging consequences for farmers and domestic industry. It will also have a significant impact on the country’s economy and food security at large,” he added.
FMPAC rejected the proposal, saying that regulating a product that is imported, is subject to variations in price due to import cost and freight (CFR) and exchange rate under the prevalent environment.
FMPAC warned that the intervention by TCP will not only lead to product shortage in the country but the proposal of a brokerage fee by TCP will also ultimately be passed on to the end-users by international suppliers.
According to FMPAC, Pakistan’s average DAP annual offtake is around 2,000 Kt per annum, supplied through nearly 35% (800 Kt) local production and 65% (1,200 kt) imports (as per current exchange rates, it is valued at around $1.2 billion per annum).
At present, 11 importing companies which include urea manufacturers, importers, and a few dealers carry out import of DAP in the country.
Domestic prices are directly linked to CFR international prices and rupee-dollar parity which varies frequently throughout the year. The imports are executed at competitive prices and on a need basis in line with a comparatively narrow application window.
As per the current import model, Pakistan has never experienced a DAP shortage. Regular and timely imports ensured product availability to the farmers while promoting the use of balanced fertilizers.
