Agri Business

Fertiliser sales take a hit on supply shortfall, higher price

Harish Damodaran New Delhi | Updated on March 12, 2018 Published on August 16, 2011


Supply shortfalls, coupled with disproportionate price increases, have led to a sharp slump in sales of non-urea fertilisers. Reduced consumption of phosphatic and potassic nutrients could play spoiler in the current kharif season, which has seen higher acreages under most crops on the back of a good monsoon.

During April-July, fertiliser firms have sold 26.40 lakh tonnes (lt) of di-ammonium phosphate (DAP), which is 25.9 per cent lower than the 35.62 lt in the corresponding four months of the previous fiscal. Sales of muriate of potash (MOP) have fallen even more by 34.7 per cent, from 9.68 lt to 6.32 lt.

On the other hand, urea sales have registered a 16.5 per cent jump, from 73.6 lt in April-July 2010 to 85.76 lt in April-July 2011. Complex fertilisers, which contain various proportions of nitrogen, phosphorous and potash (N:P:K), have likewise posted a 10 per cent growth, from 26.90 lt to 29.60 lt.

The huge dip in sales of DAP and MOP, alongside a jump in consumption of urea and complexes, is being ascribed to two factors.

The first is availability. Imports of both DAP and MOP have been lower during April-July this year over the corresponding four months of 2010, at 20.16 lt (versus 29.37 lt) and 4.32 lt (versus 27.20 lt) respectively. That, in turn, has been a result of high world prices, with landed costs currently at around $650-690 a tonne for DAP and $490 for MOP, against $525-530 and $370 during this time last year.

There have been no similar supply constraints in urea and complexes, with the imports of the former rising from 15.31 lt to 18.40 lt and that of the latter from 3.59 lt to 7.44 lt for the latter. Companies have, moreover, increased domestic production of both urea and complexes, especially those with lesser P and K content. Thus, instead of DAP (46 per cent P) or 12:32:16, they have gone in for manufacture of “low-analysis” complexes such as 20:20:0 or 14:28:14.

Availability apart, the other factor responsible for lower sales of DAP and MOP this year is farmgate prices. Since March 31, 2010 – when all non-urea fertilisers were brought under the nutrient based subsidy (NBS) regime and freed from price controls – the maximum retail price of DAP has gone up from Rs 9,350 to Rs 12,000 a tonne, while rising from Rs 4,455 to Rs 6,300 for MOP.

On the other hand, urea has been kept outside the purview of NBS and its MRP (controlled by the Centre) has been increased only moderately from Rs 4,830 to Rs 5,364.69 a tonne.

“Farmers are, no doubt, finding it expedient today to increase application of urea, as other fertilisers have become disproportionately more expensive. This could, however, worsen the overall soil nutrient imbalance that is already tilted excessively in favour of nitrogen,” noted a fertiliser industry source.

Published on August 16, 2011
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