Urea off-take refuses to break the shackles. The nitrogenous fertilizer off-take during February 2019 at 0.38 million tons, registered a 5 percent year-on-year increase. This takes the cumulative 2MCY19 urea off-take increase also to 5 percent year-on-year. Heartening numbers that at least there is positive growth, some would say. Only when reminded that the fertilizer off-take in the past six years has averaged a cumulative growth of zero percent.

The Rabi season is about to be over by the end of this month, and the numbers reflect five out of six Rabi months. The Rabi urea off-take growth is virtually zero, as the dip in urea off-take was earlier expected to be covered in the dying months of Rabi. But that has not been the case, despite continuation of subsidy on urea.

The urea price during the Rabi season thus far has averaged 27 percent higher than the previous Rabi season. The international prices have cooled down considerably from previous months, averaging almost similar to previous Rabi season. The bigger dent seems to have been caused by the sharp currency adjustment, disturbing the import parity, sending the local prices up. The 27 percent season over season increase in urea pries is the highest ever in recallable memory.

To get things in context – farmers have so far spent 28 percent more money than last year on exactly similar amount of urea as last year. The Rs93 billion spent on urea with Rabi just one month away from ending, is comfortably higher than the previous 4-year average of Rs78 billion.

The impact of considerably higher spending need on urea has fallen directly on the use of phosphate fertilizer, as the DAP off-take has come down by 12.4 percent year-on-year, versus the previous Rabi season till February. The total DAP spending at Rs78 billion is 13 percent higher year-on-year, but well within the 5-year average Rabi spend of Rs78 billion. The resultant urea: DAP application ratio at 2.4 is the highest in four years – having improved to as low as 1.7 two years ago. Farmers have time and again shown that when the going gets tough – the axe falls on DAP.

Copyright Business Recorder, 2019