EVALUATION OF MACRO ENVIRONMENT

1. STEEPLE ANALYSIS

Socio-cultural Factors

Ratings Effects
Workforce and Raw material 9 Positive
Literacy rate -5 Negative
Farmer’s education campaigns 9 Positive
Females workforce -6 Negative
Increase in country’s population 8 Positive
Competitors -6 Negative
9 Positive
Reason: The result is positive according to our analysis. The result indicate that the effect of
negative factors can be reduced by the company.

 The Sector engages the largest workforce and provides raw material to certain
manufacturing/industrial sectors.
 Literacy Rate in Pakistan is stagnant at 60%, almost 70% of them are male (2019-2020).
 Fertilizer companies use campaigns to educate farmers about use of fertilizers and modern
agri-practices.
 These campaigns have positive impact as recently urea demand increased by 17% in Q1 of
2022.
 The workforce in agricultural activities comprises of approximately 70% of females.
 Demand for agricultural products has witnessed an increasing trend due to the country’s
growing population, which has increased at an average rate of ~2.1% over the last five years.
 Major competitors are Engro Fertilizers, Fatimah Fertilizers, and Dawood Hercules.
Technological Factors

Ratings Effects
Joint venture 8 Positive
Anaerobic digestion unit 7 Positive
CO2 enriched feed stocks 7 Positive
22 Positive
Reason: The result is positive according to our analysis. The result indicate that the effect of
negative factors can be reduced by the company.

 A joint venture between Hub Power Company Limited (HUBCO), Fauji Fertilizer Company
Limited (FFC) and China Machinery Engineering Corporation (CMEC), has successfully
achieved commissioning.
 FFC has developed a prototype anaerobic digestion unit through which vegetable waste of
FFC’s subsidiary, Fauji Fresh n Freeze Limited, could be turned into high purity methane.
Revalidation of lab results for full scale plant are in progress.
 The development of cost effective CO2 removal membranes to utilize CO2 enriched feed
stocks in Pakistan. For this, a pilot scale testing unit is recently commissioned to validate the
lab scale results.

Economic Factors

Ratings Effects
Increase in inflation -6 Negative
Increase in the cost of raw material -7 Negative
Increase in fertilizer prices 7 Positive
Gas crisis -8 Negative
-14 Negative
Reason: The result is negative according to our analysis. Negative factors cannot easily be
controlled or mitigated by the company
 Inflation measured by the Consumer Price Index (CPI) increased to 27.3% on a year-on-year
basis in August 2022.
 Increase in prices in International markets has increased the cost of raw materials used in
fertilizers.
 Increase in food prices follows increase in fertilizer prices, which have increased by more than
30 percent during the last few months.
 Due to the country’s gas crisis, availability of feed stock is feared to be less during fiscal year
2022-23. This can obstruct the fertilizer supply chain. This will induce a reduction in fertilizer
production and continuation of fertilizer shortage in the market.
 This crisis of fertilizer production and availability is likely to become intense in rabi 2022-23 as gas
prices will rise further during the winter.

Environmental Factors

Ratings Effects
High fuel prices, damages due to flood -8 Negative
Emissions causing climate change -6 Negative
-14 Negative
Reason: The result is negative according to our analysis. Negative factors cannot easily be
controlled or mitigated by the company.

 Farmers were already burdened with inflationary pressures from 83% higher fertilizer and 2.1x
higher fuel prices in the last 12 months, catastrophic floods piled on to their misery, destroying
crops, cattle, infrastructure and land.
 Primary agricultural infrastructure of farmers like tube-wells, storages, seed stocks/fertilizer
inventory, various agriculture machinery and equipment – all have faced damages. These
losses would result in reduced farmer income and it will take months to restore the
infrastructure.
 Emissions from developed countries caused drastic climate change in Pakistan causing 130%
more rains than usual.
 It is predicted that there will be a 3°C temperature rise by 2040 and by the end of the century
temperatures are predicted to have risen 5-6°C that will cause lose up to 50% of their wheat
productivity (Ghanem, 2010) in Asian countries. This loss will be greater for Pakistan due to
its geographical position.

Political Factors

Ratings Effects
Changes in fiscal and monetary policies -4 Negative
Protests held by the farmers and black
-7 Negative
marketing of the fertilizers
High prices of fertilizers 6 Positive
-5 Negative
Reason: The result is negative according to our analysis. Negative factors cannot easily be
controlled or mitigated by the company.

 Political instability in the country causes frequent changes in fiscal and monetary policies.
 Recent protest held by farmers demanded restoration of tube wells, relief in electricity tariffs,
abolishment of all taxes and tariffs, reduction in rate of urea which increased by 400pc, and
lastly end of black marketing of fertilizers.
 Untimely provision of subsidies forces farmers to purchases fertilizers at higher prices.
Legal Factors

Ratings Effects
Long legal procedures -8 Negative
Unethical behavior, violation of rules, and
7 Positive
laws
Safety of contracted workforce 7 Positive
6 Positive
Reason: The result is positive according to our analysis. The result indicate that the effect of
negative factors can be reduced by the company.

 FFC’s all actions comply with the applicable laws, principles laid down in the UN Global
Compact and our internal code of conduct.
 FFC encourage employees to report any unethical behavior, violation of laws, rules,
regulations, Company policies and procedures or code of conduct to the respective committee.
 Safety of contracted workforce is also ensured through contractor’s Code of Conduct.

Ethical Factors

Ratings Effects
Farmers advisory services 7 Positive
Sona Public School and College 8 Positive
Community Uplift Programme 7 Positive
FACE (Food Security and Agricultural
8 Positive
Center of Excellence)
30 Positive
Reason: The result is positive according to our analysis. The result indicate that the effect of
negative factors can be reduced by the company.
 Farmer advisory services help in selection of good quality seeds, balanced use of fertilizer
along with guidance to farmers on new cultivation techniques.
 Sona Public School & College was established for children in Mirpur Mathelo and areas of
District Ghotki
 Community Uplift Program - Partnering with Akhuwat Foundation, providing interest free
loans to small-scale startups in Mirpur Mathelo
 FFC has established FACE (Food Security and Agricultural Center of Excellence), aims to
serve as a model for agriculture uplift and tackling food insecurity in Pakistan. FACE has many
projects such as loans, quality health, education, green energy, and women empowerment,