Rising DAP and potash prices reduce kharif yield prospects

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India’s fertilizer consumption in FY20 was around 61 million tonnes – of which 55% urea – and is estimated to have increased by 5 million tonnes during the Exercise 21. Since varieties without urea (MoP, DAP, complexes) cost more, many farmers prefer to use more urea than necessary.

As the prices of diammonium phosphate (DAP) and complex fertilizers have surged into the intentional market in recent months, domestic fertilizer companies have sharply increased the prices for the next season of kharif, which could reduce crop yields. , farmers resorting to excessive use of subsidized products. urea fertilizer instead.

The prices of phosphate and potassium fertilizers are determined by the market because government subsidies are small and fixed. Most of these fertilizers are imported.

The IFFCO fertilizer cooperative increased the prices of DAP and complex fertilizers by 46-58% for supplies from new global input contracts, compared to the rabi season. He said, however, that around 11.26 lakh of complex fertilizers would still be sold at the old rates as they were produced before the rise in world prices for the main raw material.

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“At IFFCO we will make sure that there is enough material on the market with old rates and I have asked the marketing team to only sell material already packaged with old rates to farmers. We always make decisions with a farmer-centered approach, ”IFFCO Managing Director US Awasthi said in a statement on Thursday.

An internal letter from IFFCO’s marketing director, Yogendra Kumar, to officials informing them of the new tariffs had gone viral, sparking a strong backlash on social media.

“At IFFCO, we accept a strong objection [to] tweets or news linking any political party or government for an increase in the price of complex fertilizers (mixture of N, P, K and S). They are out of control, therefore, [there is] no ties to any political party or government, ”Awasthi said.

The new prices for complex fertilizers are provisional as international prices for raw materials have yet to be finalized by companies, he said. “Indeed, there is a sharp increase observed in the trends of international commodity prices.”

The landed cost of imported DAP is now around $ 540 per tonne (40,281 rupees), up from around $ 400 in October. Likewise, the prices of intermediate products such as ammonia and sulfur also fell from around $ 280 and $ 85 per tonne to $ 500 and $ 220 per tonne, respectively. Muriate of Potash (MoP) rates climbed to $ 280 from $ 230 during the same period.

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The government deregulated the prices of potash and phosphate fertilizers in 2010 by agreeing to pay a fixed amount of subsidy to be decided at the start of each year. Fertilizer companies are allowed to set the MSP of these non-urea plant nutrients based on market rates. The country is entirely dependent on potash imports, while 80-90% of phosphate fertilizers are imported to make DAP.

India’s fertilizer consumption in FY20 was around 61 million tonnes – of which 55% urea – and is estimated to have increased by 5 million tonnes during the Exercise 21. Since varieties without urea (MoP, DAP, complexes) cost more, many farmers prefer to use more urea than necessary.

The Center has not changed the maximum retail price (PRM) for urea since 2012, when it was increased from Rs 50 / tonne to Rs 5,360 / tonne. The MRP of a 45 kg bag of urea is Rs 242 and that of a 50 kg bag is Rs 268, all prices excluding neem coating costs and taxes if applicable. Compared to that, a 50 kg bag of DAP costs Rs 1,900.

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The total government expenditure on the fertilizer subsidy has been set at Rs 79,530 crore for FY22, of which Rs 58,767 crore has been budgeted only for urea.

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