Fertilisers to Turn 10% Costlier as Potash Rates Rise
The rupee depreciation against the US dollar has also led to an increase in the price, said K Ravichandran.
Farmers will have to pay up to 10 per cent more for fertilisers this sowing season than what they paid last winter, thanks to a rise in global prices for potash, the key raw material, and a weaker rupee.
State-controlled urea prices, however, remained steady. India imports about a quarter of the 32 million tonnes (MT) of urea it consumes every year, but the entire requirement of potash is met from imports. The demand for fertilisers will peak in a fortnight with farmers going for planting of rice, soyabean, cotton, sugarcane and other crops.
Diammonium phosphate (DAP) prices are 8-10 per cent higher at Rs 1,425-1,450 a bag of 50 kg than the 2018 rabi prices. The Muriate of potash (MOP) is costlier by 8 per cent to Rs 800 per bag, while nitrogen, phosphorous and potash (NPK) grades are costing 7-8 per cent more at Rs 850-1,250 per 50 kg bag.
“Potash prices continue to move up because of global demand. In the past one year, potash prices have increased from Rs 12,000 to Rs 19,000 per tonne. This has led to an increase in the cost of production of NPK fertilisers,” said Kapil Mehan, an industry expert. There was adequate availability of fertilisers for this season. The country imports potash from Russia, Belarus, Canada, Germany, Israel and Jordan. About 90 per cent of the phosphates are imported, according to farm ministry data.
The rupee depreciation against the US dollar has also led to an increase in the price, said K Ravichandran, senior vice-president and group head for corporate ratings at ICRANSE 0.56 %. He said phosphate prices too may rise in the coming days leading to an increase in DAP prices.
“Due to anticipation of a weaker monsoon and lower kharif acreage, ICRA expects fertiliser consumption growth to be in the 2-3 per cent range in 2019-20. Nevertheless, spatial and temporal distribution of monsoon will be a key thing to be monitored,” Ravichandran said.
Urea prices will not see any change as rates are fixed by the government, said S Nand, deputy director general of the Fertiliser Association of India. Urea is the most commonly used fertiliser by farmers while preparing agriculture land for sowing. The commodity now sells at Rs 267 per 45 kg. The estimated requirement for fertilisers is 16.4 MT of urea, 4.12 MT of DAP, 2.04 MT of MOP, 5.3 MT of NPK and 2.5 MT of single super phosphate. Timely payment of Rs 70,000 crore fertiliser subsidy to companies will be the key to profitability for the fertiliser companies, with the industry reeling under stretched liquidity due to piling up of subsidy dues in the past 3-4 months, said Ravichandran.