LAHORE: The substantial reduction in domestic urea prices will help transfer Rs28 billion into the pockets of farmers, according to sources in thefederalindustries and production ministry.

The urea manufacturers have cut their price by up to Rs400 a 50kg bag after the government decided to slash gas infrastructure development cess (GIDC) in January this year.

The government had reduced the cess by Rs400 a bag from Rs405 to support the agricultural sector and ensure food security. The reductionin GIDC will not impact the government exchequer.

The reduced urea prices will help farmers increase their urea offtal(e for better crop yield in the wake of Covid-19 pandemic.

The coronavirus outbreak, which is being described as a black-swan event, is likely to pose unprecedented challenges to the country`s agricultural sector that contributes 20 per cent to the national GDP.

The urea price re duction will help sustain the agriculture sector which, the experts believe, is expected to witness a significant downturn in the wake of this unprecedented pandemic.

The urea industry alone isexpected to shrinl( to 5.2 million ton from a five-year average of 5.8 million ton.

According to the ministry, the urea price reduction will complement the government efforts to extend support to all sectors of the economy, particularly the agricultural sector, in the wake of Covid-19 disaster.

The government has already announced Rs100bn for small and medium enterprises/agriculture sector with mechanisms to be finalised in collaboration with the SBP.

The government relief package also includes Rs280bn as payment to wheat farmers through procurement of 8.5 million ton staple.