DAP price up by Rs2,500 to Rs5,510

KARACHI- Manufacturers have raised the prices of Dai Ammonium Phosphate (DAP), an essential crop nutrient, in the range of Rs 2,400-2,500 per bag amid concerns on the commitment of government to provide Rs2,200 subsidy on per 50kg bag of DAP, The Nation learnt.

Sources in Engro Chemicals and Pak American Fertilizer have endorsed the report of increase in the DAP price.

Industry expert attributed the increase to the growing doubts on the government's part to provide companies with the Rs2,200 per bag subsidy announced early Sep-2008.

Analyst Bilal Hammed at JS Global said that rise in DAP price probably further dampen the already depressed DAP sales and added that rise in price could also make a negative impact on the wheat output during Rabi (October-March) season.

Bilal said that DAP price increase would extend the oppressions of farmers regarding the cost of input

Bilal said that in the first eight months (Jan-Aug) 2008, only 199k tons of DAP have been sold, which was down 71 per cent on Year on Year basis.

However, with the subsidy announcement in early September, experts in the industry were expecting DAP sales to improve in last quarter of 2008. Now with prices above Rs5,500 per bag, higher DAP offtake is highly unlikely, he added.

"We have no other option except to raise in the commodity prices amid miss commitment from government in providing subsidy on DAP price", industry sources said.

They said that the demand of DAP for the crops of Rabi season had been growing rapidly in the local market, which would further increase in coming days.

The DAP was not available in vast quantity in the local market and its prices may further increase in the next few weeks, importers said. Importers added that the government had introduced a subsidy of Rs 2,200 per bag on DAP aimed to increase the crop productivity and quality especially to increase the output of the wheat, but the subsidy was not being provided to the industry to control the rising price. "The government was fully aware of substantial increase in international DAP prices and that this would certainly have impact on the local users during the Rabi season," importers said.

The DAP is being sold at Rs 5,500-5,550 per bag , while its actual price should have been in the range of Rs 2700/bag, sources said.

It may be mentioned here that in September-08, for smooth availability of fertilizers, the government has capped the DAP price to Rs 3,050 per 50 kg bag, while the government had to provide more than Rs 2,500 per bag as subsidy on urea due to the skyrocketing price of DAP in the international market and shortage of the fertilizers in the domestic market.

However now the prices of DAP in the international have been gradually declined.