'Fert demand in rabi to be subdued if urea prices not revised'

TCL Managing Director R Mukundan was expressing his views

The demand for phosphatic and potassic (P&K) fertilisers is expected to remain subdued in the upcoming rabi (winter sowing) season if urea prices are not revised, a top official of Tata Chemicals Ltd (TCL) said.

"We expect the demand (for P&K fertilisers) to remain subdued in the rabi season unless urea prices are adjusted," TCL Managing Director R Mukundan told PTI.

TCL is the country's leading manufacturer of urea and phosphatic fertilisers and through its subsidiary, Rallis, has a strong position in the crop protection business.

"Till the time prices of urea, a key nitrogenous crop nutrient, are way below that of P&K fertilisers, the overuse will continue," he said when asked about the demand prospect of fertilisers for the rabi season.

The issue of revision in urea prices has been on hold for sometime and industry body Fertiliser Association of India (FAI) has time and again urged the government to revise it.

Even the committee on roadmap for fiscal consolidation, headed by former Finance Commission Chairman Vijay Kelkar, has said that "the most urgent reform required on the fertiliser subsidy front is revision in the price of urea".

As per government data, the retail prices of MoP rose by 92% to Rs 23,100 per tonne in the just ended kharif (summer) season from Rs 12,040 per tonne in the 2011-12 rabi (winter) season, while, DAP prices rose by 33% to Rs 26,500 per tonne from Rs 20,000 per tonne in the same period.

The government recently raised the maximum retail price of urea by Rs 50. Before that MRP of urea was last increased by 10% to Rs 5,310 per tonne in April, 2010.

The high prices of P&K fertilisers coupled with low prices of urea has led to farmers opting for the latter option leading to demand destruction in sales of di-ammonium phosphate (DAP), muriate of potash (MoP) and complex fertilisers.

According to market data, it is estimated that for the April-August 2012 period, urea sales fell by 3%, DAP by 29%, NPK by 25% and SSP by 14% compared to the same period of previous year.

The decline is sales of MoP could not be made as during April-August 2011 the industry had declared 'potash holiday' (non-use of the crop nutrient).

The fertiliser industry has 8.35 lakh tonnes of unsold DAP till August this year as against 73,000 tonnes in the same time last year, while, 6.83 lakh tonnes of stocks of NPK fertilisers were unsold as against 1.60 lakh tonnes in the same period.

The declining sales have also led to a fall in import of these crop nutrients.

India imported about 4.24 million tonnes (MT) of DAP and 2.68 MT of MoP in the last fiscal. This is against 7.41 MT of DAP and 4.5 MT of MoP imported during 2010-11 fiscal.