Fertiliser demand soars 21% in October-December driven by strategic buying
Record sales of fertilisers during October-December quarter, the key period for rabi season, has been reported with 21 per cent increase in volume and each of the key segments – urea, DAP, potash, complex reporting higher offtake.
Experts see the record sales as a combination of farmers’ buying some extra for next kharif as well as companies pushing for higher sales, expecting a cut in subsidy.
According to latest official data, sales of urea reached 111.14 lakh tonnes (lt) during the period under review, which is 13.3 per cent higher from 98.13 lt year-ago, while those of Di-ammonium phosphate (DAP) rose to 40.13 lt from 34.84 lt, Muriate of Potash (MOP) to 7.51 lt (5.03 lt ) and Complex (combination of all nutrients) to 47.19 lt from 32.26 lt.
All these three four types of fertilisers have recorded total sales of 205.97 lt against 170.26 lt in the year-ago period.
“During the first quarter of rabi season last year, the sales had dropped and the low base effect has led to a higher level of offtake this time. But, if you compare with 2022 period (October-December), the increase is less than 10 per cent and it is normal growth. However, the government should be concerned as the impact of PM-PRANAM is not visible, so far,” said AK Singh, an agriculture scientist.
During October-December period, the fertiliser sales were 188.49 lt in 2022, 176.38 lt in 2021 and 176.06 lt in 2020.
Experts said that as there were shortages in September-October, particularly of DAP, it is possible that farmers might have purchased some extra quantity for next kharif. They also did not rule out possibility of companies pushing the sales in anticipation of reduction in subsidy for next kharif.
Subsidy component
The government has already brought down the subsidy on potash, in which India is 100 per cent import dependent, and made farmers to adjust with a new price level of ₹1,500-1,700/bag (of 50 kg). “If the same model is applied in case of urea or DAP, there may be some hike in their prices next kharif season,” an industry expert said.
Until a few years back, prices of DAP and MOP used to be almost at the same level. But the government has been raising subsidy on DAP as and when required to keep selling prices constant at ₹1,350/bag, even as the industry has favoured to keep its MRP at a premium over other fertilisers.
But, the government has taken a decision to cut subsidy on potash, making it costlier than DAP. In case of DAP, the indigenous production is about 40 per cent and the majority of the domestic phosphatic production is also through imported raw materials.
Under the nutrient-based subsidy (NBS) scheme, the subsidy on potash has been fixed at ₹2.38/kg for rabi 2024-25 season against ₹23.65/kg in 2022-23. On the other hand, the global price of MOP — which was at $280/tonne in June 2021 and reached $590 in June 2022 — has dropped to $283/tonne in October 2024.