Delayed onset of monsoon in major growing States, coupled with supply constraints arising from high global prices, has led to sluggish fertiliser sales in the first quarter of this fiscal.
During April-June, fertiliser firms sold 14.25 lakh tonnes (lt) of di-ammonium phosphate (DAP), marking a 29.5 per cent drop over the 20.21 lt in the same quarter of last fiscal.
Industry sources ascribe the lower DAP sales to three factors.
The first has to do with the late arrival of monsoon across Gujarat, Maharashtra and Andhra Pradesh. Since DAP is required primarily for root establishment with farmers applying it as a basal dressing during sowing time, the delayed monsoon onset is seen to have slowed down offtake.
The second factor is availability, with high global prices resulting in a fall in DAP imports from 16.18 lt in April-June 2010 to 9.50 lt during the latest ended quarter. While India imported 74.11 lt of DAP during the whole of 2010-11, hardly 35 lt of imports have so far been contracted for the current fiscal.
DAP of US origin
DAP of US origin is now quoting at $ 660 a tonne, free-on-board Tampa, Florida. Adding freight of $ 40 would take the landed cost in India to $ 700 a tonne, which is well above the $ 612 a tonne benchmark used by the Centre to compute the nutrient based subsidy for phosphorous.
“The $ 612 benchmark price is not adequate to cover cost of imports.
The only option, then, is to further raise retail prices charged to farmers”, the sources noted.
Related to this is the third factor: Since April 2010, farm gate prices of DAP have gone up from Rs 9,350 to Rs 12,000 a tonne. To what extent it has affected demand is something that needs to be studied.
MOP sales
The other major fertiliser, whose sales have been impacted by reduced import availability, is muriate of potash (MOP).
MOP imports have contracted from 18.74 lt in April-June 2010 to 4.32 lt in April-June 2011.
Moreover, the latter quantity represents arrivals from imports contracted in 2010-11.
During the current fiscal, not a single tonne of imports has till now been contracted.
The lower imports have not hit sales of MOP in direct form, as much as supplies to complex fertiliser manufacturers who use it as a source of potash or K in various NPK formulations. “If no imports gets contracted, we are bound to see even direct sales registering a decline in the coming months,” the sources pointed out.
Urea sales
The only fertiliser not to have taken a hit in sales either on account of non-availability or hike in prices is urea.
With the farm gate price not being revised since April 2010 and domestic output as well as imports increasing, urea sales have recorded a 25.74 per cent year-on-year jump in the first quarter of 2011-12.
This, it is feared, will further aggravate the nutrient imbalance in the soil, which is already excessively tilted in favour of nitrogen.