Govt, trade deny supply crunch in urea

There is hardly any sign of supply constraints in the market; the government too doesn’t foresee any such possibility; yet, a section of fertiliser industry suspect India might face short supply of urea.

What sent the rumours flying is cancellation of an import tender by the government through National Fertilizers (NFL) in early November. India meets 27-28 per cent of its annual urea requirement through imports by the government agencies.

The domestic production of urea was down by 3.7 per cent to 13.5 million tonnes (mt) and import was down by seven per cent to 3.7 mt during April-October 2017. However, total sale during the period was up by 3.6 per cent.

According to industry sources, the country’s urea stock was down to 1.1 mt, which is exactly half of what it was during the same period last year.

The sources further add that the Diammonium Phosphate or DAP stock is also significantly low due to dual impact of lower imports and higher sales. Unlike urea, the country meets greater part of the DAP demand through imports that was down by 12 per cent during April-October.

Interestingly, neither the trade nor all fertiliser companies share the concern.

According to a prominent dealer, farmers have already done stockpiling for winter crop. The demand of urea, he said, is lower this season in West Bengal due to government restrictions following last year’s ‘wheat blast’ infection.

“Except some brands, urea is not fetching any premium. Even the premium on better brands is as low as ₹50 on a sack of 50-kg,” said Subhasish Pal, one of the oldest and largest distributors in Malda. He doesn’t foresee any DAP shortage either.

A dealer, however, pointed out that the scheduled shift to the direct benefit transfer in fertiliser sales, beginning January has a trailing effect on the supply pipeline as companies are in last minute preparation to manage inventory.

Sources in the Fertiliser Ministry say the concern over cancellation of imports is unfounded, as they were ready to meet the demand for the kharif season (monsoon crop) which is 5 months away.

Application of fertiliser for winter crop takes place from the second half of November to the first week of December and the country has enough urea stocks to meet the demand for next two to three weeks, a source said.

As the winter demand is over, the Ministry was exploring the world market anticipating low prices. However, the bids quoted in the NFL tender were “unexpectedly higher”. NFL has come out with a repeat tender in December.