Fertiliser sales drop despite record rise in acreage

Urea sales down by 8.79% , DAP/MAP by 23.47 per cent against the year-ago period

A record increase in area under cultivation this kharif season should have brought good news for all input providers, be it seed manufacturers or pesticide and fertiliser producers.

However, data show that till August 2016, urea sales were down 8.79 per cent against the year-ago period, while those of DAP/MAP (diammonium and mono ammonium phosphate) were down 23.47 per cent. Complexes’ sales dipped 13.48 per cent.

This has come against the backdrop of a record of almost four per cent increase in acreage this season, with area under some crops like pulses going up by around 30 per cent over that in 2015.

The official explanation for this mismatch was that fertiliser dealers and stockists liquidated their unsold inventories from last year to meet the growing demand from farmers, particularly during the initial months of sowing. So while there was no shortage at the farmer’s end, dealers and wholesalers purchased fewer quantities.

Officials said the fact that there was no shortage of fertiliser for farmers would be reflected in six months and could be better captured once direct benefits transfer was implemented in the fertiliser sector as well.

Fertiliser availability and sales figure in August showed a somewhat comfortable situation at the farmer’s end, officials said.

In August, a crucial month for sowing, the availability of urea was around 4.80 million tonnes (mt). Sales at the dealers’ end were 3.11 mt. DAP availability in August 2016 was 2.41 mt, while sales were of 0.86 million tonnes.

The sale of complexes in the country in August 2016 was around 0.82 mt, while availability was around 2.08 mt. Production and availability of fertilisers in August were adequate.

Only cumulative sales showed a downward trend because of stock clearing by dealers and big traders.

Officials said a strict check on diversion of urea through neem-coating and also monitoring of dispatches at all levels also seemed to have played its part in lowering dealer sales. “There was very little chance of diversion of urea – the largest consumed fertiliser in the country – for non-farming usage as most stocks were neem-coated,” an official said.

In the 2016 kharif season itself, government said it has managed to stop 400,000-500,000 tonnes of urea meant for agriculture from being diverted to non-agriculture usages. “By the time rabi sowing is over, we plan to stop at least one mt of urea from being diverted for non-agriculture uses,” the official explained. India has embarked on a programme to coat all urea sold in the country with neem to check diversion to the chemical industry.  Meanwhile, the government’s first advanced estimate for grain production released last week showed the country was expected to harvest a record 135 mt of foodgrain this kharif on the back of a good monsoon and the highest rise in area under cultivation.

The acreage in 2016 kharif season for all crop stood at 106.75 million hectares as on September 23, 4.47 per cent more than the normal area (last five years’ average) and 3.55 per cent more than the area covered last year.