Agri Business

Farmers in North opt to sow early, face DAP crunch

Suresh P Iyengar / Vishwanath Kulkarni Mumbai/Bengaluru | Updated on October 22, 2021

Shortage of di ammonium phosphate (DAP) is being felt in some parts of North India due to high demand as farmers there are taking up early sowing of mustard and potato in view of good soil moisture following recent unseasonal rains, according to sources.

The crunch is also being felt due to the rise in import prices of raw materials such as phosphoric acid, congestion at ports, surging freight rates and distribution being hit by the farmers’ stir against the farm laws.

According to the Dashboard of the Department of Fertiliser, total requirement of DAP for the current rabi season has been estimated at 58.71 lakh tonnes (lt).

Supply of DAP during October 1-21 has been higher at 20.12 lt against a requirement of 12.25 lt. However, sales during this period have been reported at 8.21 lt.

For the remainder of the season ending March 31 next, the requirement is estimated at 50.49 lt. But, the stock availability as on October 21 was 18.67 lt.

The current situation is despite the Centre hiking the subsidy for the phosphatic and potassic nutrients by ₹28,655 crore. Rising international prices of fertiliser and key raw materials have proven to be a major challenge for India, which relies on imports to meet its rising demand.

Inventories of fertilisers have been one of the lowest at the start of this rabi season, while distribution of imported fertiliser in the northern States has been affected by frequent blockades organised by farmers, said a senior executive of a fertiliser company.

Low inventories

DAP inventories at the start of the rabi season were a low 15 lt against 40 lt during the same period a year ago. NPK complex fertiliser stocks were 30 lt against 36 lt a year ago.

Besides, the decline in availability of DAP from countries such as China has added to the industry’s woes. China was the major source for India’s DAP imports.

China’s restrictions

“For reasons not known, China has imposed restrictions on DAP exports. As a result, supplies have shrunk, triggering a challenge for us,” an official at a large fertiliser-making firm said.

In addition, global prices have surged to $750-800 a tonne from $650 a tonne two months ago. The price of Muriate of Potash (MOP), which was contracted at $280 a tonne earlier, is now sold at $500 a tonne.

This has forced domestic manufacturers of NPK to cut their production. Suppliers of phosphoric acid from Morocco have hiked prices from $1,160 a tonne to $1,400 due to sharp surge in demand. The subsidy has to be increased by ₹300-400 a bag for NPK to cover up the cost increase, the executive said. Given the current subsidy, it will not be viable to import and sell at Government fixed price.

“The lopsided subsidy favouring DAP has hampered domestic production and worked against Atma Nirbhar Bharat. The government should either increase the NPK subsidy or allow producers to pass on the incremental cost to farmers. The ideal solution would be to remove the subsidy difference between DAP and NPK,” the official said.

In the North, at least 20-30 per cent of the farmers can switch between DAP and NPK as per availability and cost.

Apart from these problems, it takes 50-60 days for the material to arrive at ports and dispatch to end consumers.

Published on October 22, 2021

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