ISLAMABAD - Fertilizer industry has expressed serious concerns over approval of DAP import through Trading Corporation of Pakistan (TCP).

The TCP has recently been authorized by Economic Coordination Committee (ECC) to facilitate import of DAP without any financial burden on the government. This has raised concerns in the domestic importers as it is likely to hit the supply chain badly. In a letter to ministry of commerce, Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC) has raised serious concerns over approval of DAP import though TCP. According to the letter, the approval of such an important subject without consulting the stakeholders is to the utter dismay of the fertilizer industry which has been ensuring timely availability of fertilizers through competitive bidding at the opportune time over the past years, ever since, the import of DAP has been deregulated.

Executive director FMPAC, Brig ® Sher Shah Malik said that it is important to examine the implications of the proposal for the fertilizer supply chain to avoid subsequent complexities. The intervention of TCP in phosphatic fertilizer imports will have damaging consequences for the farmers and domestic industry and will also have significant impact on country’s economy and food security at large, he added.

FMPAC rejected the proposal saying that regulating a product which is imported is subject to variations in price due to import CFR cost and exchange rate under the prevalent environment. FMPAC warned that the intervention by TCP will not only eventually lead to product shortage in the country but the proposal of brokerage fee by TCP will also be ultimately passed to the end users by the international suppliers.

According to FMPAC, Pakistan’s average DAP annual off take 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 around USD 1.2 billion per annum). At present, eleven (11) importing companies which include urea manufacturers, importers and few dealers carry out import of DAP in the country. Domestic prices in the country are directly linked to CFR international prices and rupee dollar parity which frequently vary throughout the year. The imports are executed at competitive prices and on need basis in line with comparatively narrow application window.

Intervention of TCP in phosphatic fertiliser imports will have damaging consequences for farmers and domestic industry

As per current import model, the country never experienced DAP shortage. Regular and timely imports ensured product availability to the farmers while promoting the use of balanced fertilizers. The data for last 10 years shows that fertilizer industry carries significant DAP stocks throughout the year over and above the buffer stocks. This has significant carrying cost which is currently borne by importers. Brig Sher shah stated that the proposed model might be envisioned to provide protection against price increase in the international market if domestic price is kept unchanged due to old stock acquired at lower rates. However, it must not be overlooked that in such a scenario, it will lead to reluctance of the importers to further import due to fear of losses. Similarly, in case of decrease in international DAP prices, our farmers will be deprived of the benefit as costlier imported stocks bound to be sold by at higher prices to avoid extensive loses to the dealers. If importers are compelled to adjust prices, they will avoid investing in DAP thus leading to DAP shortage in the country.

FMPAC requested government that the regulation of DAP import should not be executed in the national interest to ensure uninterrupted availability of DAP to the farmers throughout the year because this regulation will undermine national efforts to attain self-sufficiency in fertilizers by discouraging any new investments in the country.