By Ayesha Saba ISLAMABAD, Nov 03 (INP-WealthPK): The fertilizer industry of Pakistan has huge potential to become one of the leading exporters in the region in the coming years. In Pakistan, agriculture contributes about 22 percent to the gross domestic product (GDP), employs 44.8 percent of the labor force, and is a major source of foreign exchange earnings. Most of the country's population living in rural areas is directly or indirectly linked with agriculture for their livelihood. Thus, whatever happens to agriculture is bound to affect not only the country's growth performance but also, to a large extent, the country's population. In Pakistan, to meet the high demand for food, agriculture is mostly dependent on fertilizers. Fertilizers are the nutrient essential for modern farm technology for achieving large production and growth of plants and crops. There are three main types of fertilizers used by the agricultural sector. These include nitrogenous fertilizers such as urea and CAN (calcium ammonium nitrate), phosphorous fertilizer (DAP), and potassium fertilizer. The most common types of fertilizers are nitrogenous fertilizers, mainly urea, due to their vital properties and lower prices as compared to other types of fertilizers. In Pakistan, urea is considered a high-quality fertilizer that is suitable for all crops and all types of soil. The fertilizer sector in the country has evolved over the decade. Initially, the industry was short of supply but over time, new investment and technologies resulted in a significant increase in capacity with government promotions through subsidies and research support. Production of all the fertilizer companies is controlled and regulated under the National Fertiliser Corporation (NFC).  NFC was introduced to encourage the investment sector and make Pakistan self-sufficient in fertilizer production. The government's intervention in the shape of subsidy and tax relaxations has improved the performance of the fertilizer industry. The government is currently giving indirect subsidies to the fertilizer sector by offering subsidized input such as natural gas to keep prices low. The prime objective of fertilizer subsidy is to maintain the prices of essential food commodities such as wheat, rice, and sugar in the affordable range for the poor segment of society. With the entry of more players in the industry, the domestic production capacity of various fertilizers has increased which has surpassed the national demand consistently over the past years. The fertilizer sector contributes approximately 4.4 percent to the Large-Scale Manufacturing (LSM) sector of Pakistan and approximately 0.9 percent to the overall GDP. Annual fertilizer production was recorded at approximately 8 million tons in CY20 and offtake was recorded at approximately 9.9 million tons in FY20. Urea accounted for almost 61 percent of the country's total fertilizer offtake in CY20, followed by DAP (24 percent). In the form of taxes and levies, the fertilizer industry contributes to the national economy by paying almost an amount equivalent to its entire profit. The supply of locally manufactured urea at significantly subsidized prices as compared to imported fertilizer has allowed increased consumption by the farmers, leading to higher crop yields.