Agri Business

‘Demonetisation will benefit farmers in the long run’

V Sajeev Kumar Kochi | Updated on January 16, 2018 Published on December 08, 2016

US AWASTHI, MD, Iffco



The Indian Farmers Fertiliser Cooperative Ltd (Iffco) foresees immense opportunities post-demonetisation, as it sees farmers going online and utilising digital payment gateways to buy seeds and fertilisers. The emerging situation has also facilitated Iffco to take up measures in educating its 55 million farmers in moving towards digital rural marketing initiatives.

US Awasthi, Managing Director, Iffco, anticipates remarkable changes in less than a year for farmers once they shift to digital and cashless payments. He strongly advocates eliminating third parties or middlemen in agro sales and subsequent cash dealings. If the government succeeds in removing mandis and commission agents, good prospect await the farming community, especially when GST is in place next year, he adds. Excerpts from a recent conversation he had with BusinessLine:

How has demonetisation affected farmers?

No doubt, cash shortage has affected them badly, especially on the primary agricultural cooperative societies dealing directly with farmers. However, we have taken some steps to overcome the crisis by offering them credit for 30 days to ensure timely availability of fertilisers.

We have also started requesting farmers to work towards a cashless payment system by advising them to participate in the training programmes organised by Iffco on Rupay cards, mobile banking and other cashless payment modes. We have already started a cashless system in Gujarat, Madhya Pradesh and Chhattisgarh and this will be extended to other parts shortly.

Will the currency shortage affect Rabi sowing and lower fertiliser demand?

There is an increase by around 8.5 per cent in the total area sown under rabi crops as on December 2, from the previous year. The area sown stands at 415.53 lakh hectares compared to 382.84 lakh hectares in 2015, which indicates that sowing has not been affected. There is adequate fertiliser availability to cater to demand.

All indigenous manufacturing units are all doing well. Urea production in this financial year will be around 23 million tonnes. DAP production should be around 4 million tonnes and NPK about 9 million tonnes.

We do not envisage any mismatch between demand and supply. DAP import contracts to the tune of 4.5 million tonnes, urea imports of more than 4 million tonnes and MOP import of around 2 million tonnes have already been made this fiscal year to meet demand. I hardly believe there will be any shortage in the rabi season.

What would be the rate of fertiliser in the market vis-à-vis international prices?

The Union government statutorily controls the urea maximum retail price. With the recent downward trend in import prices, there should not be any change in the urea MRP. However, the subsidy for urea is likely to reduce.

With regard to P&K fertiliser prices, companies have already reduced MRP keeping in view the reduction in international prices. India is mainly depending on import of P&K fertiliser. The raw material prices for P&K have not reduced commensurate to the finished fertiliser prices.

Also, there is an increase in dollar-rupee parity. Any upcoming variation in fertiliser prices would depend on nutrient-based subsidy prices to be determined by the government.

What are the current trends in fertiliser production?

The fertiliser industry needs to re-orient itself considering the diminishing demand for chemical fertilisers worldwide. The majority of consumers are against the usage of chemical fertilisers and they are still looking for a different combination. The drop in global fertiliser prices and shift towards bio-fertilisers has affected chemical fertiliser consumption.

Therefore, we should amalgamate liquid fertilisers, bio-fertilisers, compost, natural fertilisers, green manuring and take up research in nano-fertilisers. There is also a need to provide a drive on soil sampling and to increase soil nutrients to enhance productivity.

Do you expect a business drop due to falling fertiliser prices?

Turnover is likely to remain flat in the current fiscal year due to low consumption of chemical fertilisers and a shift towards bio-fertilisers. Today, international prices are down and the usage of bio-fertilisers has gone up.

Considering all these developments in the fertiliser industry, I do not find any reasons to set up more fertiliser production plants.

Published on December 08, 2016
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