Agri Business

Cabinet approves subsidy for DAP, MoP fertilizers for kharif 2022

Prabhudatta Mishra | | Updated on: Apr 27, 2022

Karnataka is heading towards a severe shortage of chemical fertilisers. with many fertilisers manufacturing companies unable to purchase raw materials owing to their high cost, the availabality of stocks has touched the rock bottom acrosss the state. the fertiliser shortage has acquired an ominous ring given that the kharif season is set to begin in the first week of April. similar problem is being faced by some other states too. The prices of raw materials required for Phosphatic and Potassic fertilisers have gone up dramatically in international market. A year ago, a metric tonne of sulpur cost about $ 100 and by December end it had touched $500, forcing leading fertilser manufacturers to either scale down their production or stop the production itself. The DAP shortage was put at 9,000 tonnes in February and 18,000 tonnes in March. In case of complex fertilisers, unmet supply commitments stood at 50,000 tonnes in Jauary, 34,000 tonnes in February and 68,000 tonnes in March. According to the Agriculture Department during the kharif season the state requires 8 lakh tonnes of urea, 3.8 lakh tonnes of DAP, 2.3 lakh tonnes of MOP and 5.67 lakh tonness of complex fertilisers. The situation is so alarming that Governor of Karnataka Mr Rameshwar Thankur has written to both prime minister Manmohan singh and Ramvilas Paswan, Minister for Chemical, Fertilisers and Steel requesting them to take steps to make fertilisers available immediately in Karnataka, The pic shows a farmer distributing fertilsers at his farm house at Magaditaluk near Bagnalore . Pic G R N SOMASHEKAR_BANGALORE- 29th Mar 2008. | Photo Credit: G R N SOMASHEKAR

Subsidy per bag on DAP will increase to ₹2,501 from existing ₹1,650

The Cabinet on Wednesday approved Nutrient Based Subsidy (NBS) rates for Phosphatic (P) and Potassic (K) fertilisers for ensuring that the fertilisers are available in time for the kharif sowing . The decision will help companies to plan their imports of the fetilisers as the country is mostly dependent on overseas supply of phosphatic fertilisers.

“Subsidy approved by the Cabinet for the NBS Kharif-2022 (until September 30) will be ₹60,939.23 crore, including support for indigenous fertilisers—SSP through freight subsidy and additional support for indigenous manufacturing and imports of Di-Ammonium Phosphate (DAP),” the government said in a statement.

Subsidy doubled

Though the government said that subsidy per bag (50 kg) on DAP will increase to ₹2,501 from existing ₹1,650, the average subsidy was ₹1,211.55 per bag during 2021-22. This means the subsidy has more than doubled this year, at least for the kharif season.

Information and Broadcasting Minister Anurag Thakur, announcing the cabinet decision, said farmers would continue to get the DAP at ₹1,350 per bag. Recently IFFCO had raised DAP price to ₹1,350 per bag from ₹1,200 last fiscal.

However, the subsidy on muriate of potash (MoP) has been kept at around ₹750 per bag, sources said. Though, it has more than doubled from last year’s ₹303 per bag (annual average) , it may not bring down its current retail prices of ₹1,700-1,750 as the import cost is too high for potash. The annual average MRP of MoP was ₹1,130/bag in 2021-22. “Even in 2011, when there was a price spiral globally, the government had subsidised to the extent of nearly ₹1,000 per bag. But this time there is an unprecedented hike after the Russia-Ukraine war and any cool off is expected only after end of war of when supplies from the war zone resumes,” said an industry expert.

The increase in the international prices of DAP and its raw materials have been primarily absorbed by the Centre and the hike in global prices of these fertilisers and its raw material is in the range of nearly 80 per cent.

“The decision will help farmers receive notified P and K fertilizers on subsidized, affordable and reasonable rates and support the agriculture sector,” the statement said.

“As far as the farmers are concerned, from time to time, we have been giving benefits. There is a sharp increase in raw material cost, shipping cost and other components which has led to the overall price increase as far as P and K fertilisers are concerned,” Thakur said.

Published on April 27, 2022
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