Fertilizer prices: Government ready to protect farmers from soaring global fertilizer prices: sources

The government is striving to provide affordable fertilizers to farmers with the necessary subsidies despite rising international market prices due to the Russia-Ukraine conflict, huge procurements by China and other global factors that could push the annual fertilizer subsidy up to 2,000 rupees deliver crore in the current fiscal year, sources said. Amid some concerns and questions raised by opposition parties in parliament, a senior government source said on Monday that farmers’ interests are paramount to the Modi government and this is already evident through the huge subsidies on various crop nutrients don’t be afraid, even if the bill adds up.

“We have already made sufficient provisions for the kharif season starting in May, including 30,000 tons of DAP (di-ammonium phosphate) and 70,000 tons of urea. We are fully prepared for Kharif requirements and will make further procurements as needed,” the source added.

Government officials pointed out that the price of urea in the domestic market today remains at Rs 266 per 50kg sack, while the price in the international market has risen to Rs 4,000 per sack, resulting in a subsidy of around Rs 3,700 per sack.

The price of NPK (Complex Fertilizer) is unchanged for almost a year at Rs. 1,470 per sack, while the DAP price in the domestic market remains at Rs. 1,350 per sack, while the international price rises to Rs. 4,200 per sack. The NPK price has not changed since we raised it to Rs 1,470 per bag a year ago when it was raised from around Rs 1,300, officials added.

They also pointed out that prices in India are much lower than many other countries, including neighboring countries like Pakistan and China, as well as compared to countries like the US, Indonesia and Brazil.

“The concerns expressed about increasing fertilizer prices are misplaced,” said the source cited above.

“We have not increased fertilizer prices despite the increase in the international price due to global factors such as those directly and indirectly related to the Russia-Ukraine war and sanctions on Iran. We are trying to keep domestic prices unchanged in the interests of our farmers,” the source added.

Also, China has been making large-scale procurements to bolster its own domestic capacity, although it used to export, the source said.

The source estimates that soaring international prices could see the total burden of fertilizer subsidies soar to as much as Rs in the just completed fiscal year 2021-22.

In general, the fertilizer subsidy is around Rs 80,000-85,000 crore in a year, but it has been higher in the recent past.

“We will be self-sufficient with urea in a year or a year and a half. Three plants with a capacity of 30-35 lakh ton have started while we have long-term agreements with Oman for around 10 lakh ton. Besides, plants in Sindri and Barauni will be operational soon and that will also increase our capacity,” added the source.

Earlier, government officials said India was in talks with several countries and was exploring long-term agreements for the supply of key soil nutrients.

The preparations ahead come as global fertilizer prices remain high amid tight supplies hit by the COVID-19 pandemic and restrictions imposed by China, from where India imports 45 percent of its DAP needs and some amounts of urea , officials added .

In the case of urea, the government sets the MRP (maximum selling price) and compensates producers for the difference between the MRP and the cost of production. Urea-free fertilizers such as DAP and MOP are priced by private companies and the government gives them a fixed amount of subsidy.

A rise in global commodity prices has also impacted domestic DAP rates.

In February, Union Minister for Chemicals and Fertilizers Mansukh Mandaviya told Lok Sabha that there is no shortage of fertilizers in the country and the price of urea has not increased since the Narendra Modi government took power in 2014.

“There is no shortage of fertilizers in the country. However, some states have noted interseasonal shortages of DAP fertilizers, particularly in some counties.

“Accordingly, DAP rakes have been moved at the request of state governments to meet the requirements. However, the overall availability of DAP and other fertilizers in the country including Tamil Nadu is comfortable during the ongoing 2021-22 Rabi season,” he had said.

Mandaviya also said that the price of urea has not increased in the past seven years to avoid hardships for farmers.

“We have not increased the price of urea in the past seven years, although the international price has increased,” he said.

The minister had said that the government had taken various steps to ensure the convenient and timely availability of all fertilizers in the country.

Last month, Mandaviya also urged Jordan, Morocco and other countries to responsibly price their fertilizers, as crop nutrients are inputs to food security. Fertilizer prices: Government ready to protect farmers from soaring global fertilizer prices: sources

Russell Falcon

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