The Hindu Business Line : Farmers likely to feel the pinch of di-ammonium phosphate shortage

New Delhi, June 11 The tight supply position in fertilisers – manifested in sporadic incidents of farmer violence in some States – may be felt mainly in di-ammonium phosphate (DAP), a vital nutrient required for root establishment applied as a basal dressing during sowing time.

In the current kharif season (for which sowing/transplantation operations have begun), the projected DAP requirement is anywhere between 40 lakh tonnes (lt) and 48 lt, with domestic production estimated in the region of 19-20 lt. To meet the balance, imports of about 29 lt have already been contracted.

This includes around 8 lt each by Indian Farmers Fertiliser Cooperative (Iffco) and Indian Potash Ltd, three lt by the K.K. Birla Group’s Zuari-Chambal combine, two lt by Tata Chemicals, 1.5 lt each by Rashtriya Chemicals & Fertilisers (RCF) and Mosaic India (a Cargill affiliate), and the rest by players such as the Murugappa Group, Gujarat State Fertiliser Company (GSFC) and Gujarat Narmada Valley Fertiliser Company (GNFC).

“Of the 29 lt, only 17-18 lt will arrive for use in this season. The rest will come after August, by which time kharif sowing is over and the material can only be used for rabi planting,” sources told Business Line. That would translate into a shortage of 5-10 lt.

The importers, on their part, have taken a huge gamble, contracting at landed prices of $1,100-$1,300 a tonne. If the customs duty of 5 per cent and Rs 2,500 per tonne towards bagging, stevedoring and inland freight is added, the total cost at distribution point would work out to Rs 55,000-60,000 a tonne.

On the other hand, the maximum retail price of DAP (inclusive of distribution margin) has been fixed by the Centre at Rs 9,350 a tonne. The gap of Rs 45,000 a tonne or more will have to be footed by the Centre as a ‘concession rate’ payable to importers. This is way above the Rs 13,182 a tonne rate fixed on imported DAP for February 2008!

“The companies have contracted the imports on the assumption that they would be paid. But if the Centre pays, it would mean a huge jump in the fertiliser subsidy bill,” the sources added.