Arsalan Ali

The imports of agricultural and other chemical groups during the first six months (July-December) of the current fiscal year (2022-23) dropped 35% in comparison to the same period of last year.This significant decline could potentially have a detrimental impact on local agricultural productivity and food security.

According to a report published by Trade Development Authority of Pakistan (TDAP), the total import value of agricultural and other chemical groups was recorded at $5.176 billion during the first half of the current fiscal year, a significant decrease from $7.937 billion in the corresponding period of the previous fiscal year.

TDAP/WealthPK research

The import of agricultural and other chemical groups during second quarter (Q2) of the current fiscal year was $2.540 billion, representing a decline of 44% compared to $4.519 billion in the same quarter of the previous fiscal year. Furthermore, the import value in Q2 (Oct-Dec) was 4% lower than $2.636 million in Q1 (July-Sept).

During Q2 of FY23, all sub-sectors of agricultural and other chemical groups, including insecticides, medicinal products, and plastic material imports showed a decrease, except for the import of fertiliser manufactured. Notably, the import of medicinal products experienced a significant decline of 81%, followed by plastic material at 19% and insecticides at 15%.

On the other hand, imports of manufactured fertiliser surged by 31%, with a recorded value of $351 million during Q2FY23 as opposed to $267 million during the same period of FY22.

Furthermore, a significant difference of $1.588 billion was witnessed in the import value of medicinal products when compared to the same period of FY22. This sharp decline in medicinal products imports can be attributed to the completion of the Covid-19 vaccination process for Pakistani citizens, according to the report.

The report highlighted that all fertilisers were being imported at 0% customs duty, and DAP (Di-ammonium Phosphate) was also being imported from China under the Free Trade Agreement between the two countries. Fauji Fertiliser Bin Qasim Limited (FFBL) is the sole producer of DAP in Pakistan. The FFBL has recently submitted a proposal requesting the exemption of general sales tax (GST) at the input stage or the imposition of GST or duty at the import stage of the DAP fertiliser.

The report said that the international prices of imported DAP fell, leading the FFBL/FFC to sell DAP at import parity prices. In such circumstances, the imposition of GST on imported DAP may not be feasible. The report stated that the import of insecticides significantly decreased due to the non-opening of LCs. This has resulted in the unavailability of appropriate insecticides for crops such as rice, mango, citrus fruits, vegetables, maize, sunflower, and other vital crops that are crucial for ensuring food security and foreign exchange earnings.

The report pointed out that delay in opening LCs for such commodities can have a negative impact on national productivity and the area under these crops, leading to shortages and severe food inflation in local markets.The report stated that imports of chemicals and fertilisers are essential for maintaining soil fertility and increasing crop yield. It added that without these imports, the farmers may struggle to produce enough crops to meet the demands of the population.

Credit: Independent News Pakistan-WealthPk