Amid the current Middle East tensions, Pakistan is grappling with a fertiliser crisis that is revealing significant weaknesses in its agricultural economy. The closure of the Strait of Hormuz has led to a surge in urea prices by nearly 47% in less than a month, impacting global fertiliser markets. Pakistan, despite claiming near self-sufficiency in urea production, heavily relies on imported phosphate fertilisers, especially Di-Ammonium Phosphate (DAP), as highlighted by a report from Daily Mirror.
The report emphasizes how Pakistan’s fertiliser policy has historically favored subsidizing natural gas for local urea production, leading to nitrogenous fertiliser self-sufficiency. However, the lack of similar policy support for phosphate fertilisers has left Pakistan dependent on imports for DAP, crucial for crops like wheat, rice, and cotton. DAP constitutes around 15–18% of Pakistan’s total fertiliser consumption, but its production, unlike urea, relies on rock phosphate, a resource the country lacks.
The imbalance in fertiliser supply systems has been further exacerbated by the closure of the Strait of Hormuz, a key global phosphate trade route. This disruption has significantly increased international DAP prices, impacting Pakistan, which imports a significant portion of its DAP requirement from the Middle East. The rising costs and tightening supplies have led to a decline in DAP sales during the current Rabi season, with farmers facing challenges due to soaring prices.
The current fertiliser crisis in Pakistan is not solely a result of external shocks but also stems from policy failures. Despite substantial annual gas subsidies for fertiliser producers, the government neglected to develop domestic phosphate capacity or secure alternative supply chains. Critics argue that the subsidy structure, while benefiting industry profits, failed to address the fundamental vulnerability in fertiliser supply, as highlighted in the report.
