Higher prices of imported raw materials push up agri-nutrients’ cost

Vishwanath Kulkarni |Rutam V Vora | | | Updated on: Dec 06, 2021

Over the past one year, raw material prices have seen a sharp jump in the international market.

Hardening of raw material prices in the international market has prompted fertilizer companies to hike the prices for agri-nutrients in the domestic market.

Announcing its decision to hike the prices of agri inputs including di-ammonium phosphate (DAP) and different varieties of NPK (phosphatic fertilisers), Indian Farmers Fertilisers Cooperative Ltd (IFFCO) stated that the prices of complex fertilisers are decontrolled and linked to fluctuations in the prices of raw materials in the global market.

IFFCO makes DAP and other complex fertilisers at the cooperative’s Kandla and Paradeep plants with combined capacity of 43 lakh tonnes (lt) per annum. The cooperative earns nearly 45 per cent of the total revenue from DAP fertilisers. It has about 26 per cent market share in urea segment, including the imported urea. IFFCO’s Kandla plant is dependent on imported phosphoric acid.

Over the past one year, raw material prices have seen sharp jump in the international market. Potash prices have increased this year to $280 per tonne as against $230 last year, said PS Gahlaut, Managing Director, Indian Potash Ltd (IPL). IPL had recently signed an agreement with Belarus Potash Co for import of eight lt potash at $280/tonne. IPL will take a call on raising the retail prices on Monday, Gahlaut said.

While Muriate of Potash (MoP) has increased by 21 per cent to $280 a tonne, the DAP is ruling around $545-550. Similarly, phosphoric acid prices have also seen an increase, forcing the fertiliser companies to hike the retail prices. Unless the Government increases the nutrient based subsidy, the retail prices of these potassic and phosphatic nutrients will go up, an industry source said. For 2021-22, the Government is yet to announce the nutrient based subsidy.

Imports may come down

Gahlaut said the price rise may result in a decline in potash imports by around 20 per cent. India is totally import-dependent on potash and sources it from six countries — Belarus, Canada, Russia, Israel, Jordan and Germany.

“The price trend for global fertilisers over the past few months have been moving up. Also, the availability situation has been tight as far as India is concerned. There has been hardening of prices of all raw material,” said Suresh Krishnan, MD, Paradeep Phosphates Ltd.

Farmers flay move

Meanwhile, farmers’ organisations demanded immediate withdrawal of the hike. Samyukt Kisan Morcha leader Darshan Pal said the input cost of farming is increasing so much that it exceeds the prices of the crop.

The All-India Kisan Sabha said IFFCO notification came out just two months after it said that prices will not be increased as they aimed to reduce agricultural input cost to farmers. “This has happened as the Government has promoted deregulation in the fertiliser sector and companies are fixing farm-gate prices without even transferring the benefit of fertiliser subsidies to farmers,” it said in a statement.

Published on April 08, 2021
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