KARACHI: Engro Fertilizers chief financial officer (CFO) Imran Ahmed has dispelled the impression that the food inflation is due to the urea price hike rather it is the global food inflation, which is giving rise to inflation in Pakistan.

During a media briefing at the Karachi Press Club on Wednesday Ahmed said: “Food inflation is one of the biggest challenges being confronted by the government. However, food inflation is not unique to Pakistan, as global food prices have jumped 34 per cent between July 2020 and June 2021, owing to a surge in oil prices, supply chain disruptions and unfavourable weather conditions.”

“The fertiliser industry is playing a critical role in ensuring food security and managing food inflation in Pakistan through adequate and affordable supply of urea at one-fifth the international prices,” he added.

Globally, the food prices have soared to its highest point in a decade and that has translated locally, where the prices have even been adversely impacted by the rupee devaluation on top of the global price rise, he said.

Talking about the hike in urea prices, the Engro Fertilizer CFO said every Rs50/bag increase in urea price has an impact of only one paisa on the price of a ‘roti’.

The impact of Rs50/bag increase in urea price on other agri commodities such as rice, sugar, maize, potato, tomato and banana is all within 10 paisas/kg.

“The local fertiliser industry has shielded farmers from a steep rise in [the] international urea prices, as domestically produced urea is currently priced at 2012 level. Urea is available in Pakistan at a significant discount of 81 per cent, equivalent to Rs7,500/bag, compared with the international rates.”

“As a result, [the] farmers are getting an annualised benefit in excess of Rs350 billion and the country is expected to save $3 billion in import substitution during 2021,” he said.

Ahmed commended the present government for its efforts to transform the agriculture sector of Pakistan and provision of supportive policies that enabled the fertiliser sector to reduce urea prices by Rs400/bag last year.

In the absence of a strong local fertiliser industry, Pakistan would have faced massive urea shortages such as India where the landed urea imports are costing as much as $1000/tonne, or even more dire food emergency as was currently being experienced in Sri Lanka.

Ahmed said that the real issue being faced by the local farmers is the global hike in di-ammonium phosphate prices by over 100 per cent, that has reflected locally, as well as the majority of DAP demand is met through imports.

He urged the government to promote a balanced mix of fertilisers for higher crop productivity, and to urgently provide relief to the farmers by implementing the much-promised DAP subsidy.

Currently, the subsidy on DAP is being extended only by the government of Punjab.

The federal government should convince and mobilise other provincial governments to immediately allocate funding for phosphatic fertiliser subsidy for the Rabi season, Ahmed added.

It has been widely recommended by the farming community that the government should increase the subsidy amount to Rs2,000/bag in view of the current DAP prices.

Further, the subsidy should not be restricted to the number of bags, but instead be based on land holding and recommended dose for the farmers.