Agri sector expected to maintain its growth trajectory

ISLAMABAD – The agricultural sector in Pakistan is expected to maintain its growth trajectory owing to continued government support, improved farm economics and availability of urea at significantly discounted rates compared to global levels. 

Latest industry data shows that the urea market remained adequately supplied and, in August this year, offtake rose by 10% to 629,000 tons compared to last year. On a year-to-date basis till August, 4.07 million tons of urea have been sold against 3.78 million tons during the same period last year. Around 184,000 tons of urea inventory is also available with fertilizer manufacturers to meet market needs. 

In a recent consultative meeting between the Ministry of Industries and Production, Petroleum Division, Finance Division, Ministry of National Food Security Research and fertilizer industry, the urea demand for Rabi season 2021-22 has been estimated at around 3.2 million tons. The government also appreciated the role of fertilizer industry in ensuring timely and affordable availability of fertilizers for the farmers, which has also helped reduce the import bill. 

According to Rahul Hans, analyst at InterMarket Securities, “The government’s focus on agricultural sector, better support prices and improved farm economics have helped the sector to remain buoyant. As a result, urea sales have also continued to remain strong as self-sufficiency in production has not only averted any supply chain shocks, but also ensured availability at 60% discounted rates compared to the global markets.” 

“Urea offtake is expected to remain healthy in the coming months. The increase in farmer incomes is providing a liquidity cushion that will help elevate sales of key inputs, such as fertilizers and tractors. Barring any adverse climatic event, the agricultural sector is well poised to support the overall economic growth this year as well”, he added. 

Since the start of 2021, competition among countries for limited supplies amidst robust demand, and sky-rocketing freight charges, has driven global urea prices higher by 44% from US$ 309 per ton FOB in January 2021 to US$ 444 per ton by end of August 2021. However, due to sufficient production capacity of around 7 million tons, urea prices in Pakistan have remained stable and a 50 kg bag is priced at 2012 level of Rs 1768. 

The recent Economic Outlook report by the Ministry of Finance has also noted that the inputs availability for agricultural sector is satisfactory. “It is expected that the agriculture sector will continue to perform better on account of continuing support of the government to the sector. An additional amount of Rs. 25 billion is being allocated for the development of the agriculture sector,” the report stated. 

Further, the report depicted a favorable situation of farm incomes as tractors production increased by 38.3 percent to 4,600 in July FY2022, while its sales also increased by 19.9 percent to 4,332 compared to the same month last year.

Article source: https://nation.com.pk/12-Sep-2021/agri-sector-expected-to-maintain-its-growth-trajectory