Fertiliser subsidies - a farmers' perspective.

With a burgeoning population, food security is now a key challenge for Pakistan, especially when 38 per cent of children in the country are stunted due to insufficient dietary energy consumption.

To address food security challenges, Pakistan needs to pursue three strategic choices: expansion of the cultivated area, increase in per acre yield, and improvement in cropping intensity (crops in a year). However, successful implementation of all these entails greater consumption of fertiliser in the country.

Unfortunately, the previous fertiliser policies of 1989 and 2001 were production-centred and envisioned incentives for manufacturers and importers. In contrast, farmers are still awaiting a comprehensive policy on fertiliser subsidies that can ensure adequate and affordable fertiliser supply, rather than stop-gap reliefs announced by the government from time to time.

Fertiliser subsidies are essential due to multiple factors, including Pakistan's soils deficiency in all three major crop nutrients (nitrogen, phosphorous, potassium), lower crop productivity than the world's averages, low fertiliser usage (kilograms per acre) in comparison to other regional countries, and, most importantly, drastic price hike of fertiliser in the last year, which has resulted in a significant decrease in offtake of phosphatic and potassic fertilisers.

Ensuring DAP's realistic and stable prices, free of anomalies, is a challenge that can't be left to market forces alone, especially when a few players are controlling its manufacturing and import

Currently, the federal government is providing a subsidy on imported fertilisers. Additionally, it is also extending indirect subsidies in the form of tax relief and gas subsidies to fertiliser manufacturers. On the other hand, the provincial government of Punjab is providing a direct (targeted) subsidy to farmers on phosphatic and potassic fertilisers through e-vouchers. All these federal and provincial relief measures collectively amount to around Rs200 billion.

With a total country's cropped area of 23.3 million hectares (57.5m acres) and a cropping intensity of 159pc; these subsidies total a mere Rs2,188 per acre per crop.

This is insufficient if Pakistan has to develop a globally competitive agriculture sector, especially when a bag of di-ammonium phosphate (DAP) and sulphate of potash (SOP) fertilisers cost Rs10,300 and Rs16,000 today, respectively.

Many consider fertiliser subsidies a highly inefficient policy...