International suppliers slash fertiliser rates

The Indian fertiliser industry, which is facing rough weather due to depreciating rupee that is ultimately putting pressure on the farmers, has got some relief as some of the international suppliers have agreed to cut the prices — by around five per cent.

This has prompted Iffco (Indian Farmers Fertiliser Cooperative Limited) to announce that it would not raise prices of these fertilisers till the end of the current financial year.

“Some of our suppliers have agreed to reduce prices by $35 for Di Ammonium Phosphate and $ 25 for NPK Complex,”

Iffco managing director U S Awasthi said on Thursday. Talks are on with other suppliers of DAP and NPK complexes, besides Muriate of Potash, he told Business Standard.

The 1967-founded fertiliser major had — earlier this week — demanded from the international suppliers to reduce the prices of DAP, NPK Complexes and MoP by $50, $45 and $36 per tonne, respectively. The demand came in the wake of the depreciating rupee that was squeezing the margins of the fertiliser companies to a large extent. Ironically, on Thursday the rupee snapped eight-day falling spree against the dollar and closed 29 paise higher at Rs 52.06/07 a dollar.

Fear still lurks the retail rates of fertilisers would further shoot up in India if overseas suppliers do not reduce them. Prices have already escalated over 100 per cent for DAP and over 60 per cent for MoP in a year’s time.

With this development, Iffco, the country’s largest fertiliser producer and distributor with 40,000 member-cooperatives, will not hike the prices of fertilisers till March 31, 2012, Awasthi added.

Analysts say that this has come as a relief. Practically, these changes will benefit all the fertiliser companies in the country. Mumbai-based Tarun Surana of Sunidhi Securities says the fertiliser subsidy, given the country’s fiscal situation, cannot have been raised. “Even increasing prices would not have helped as the demand is going down due to high prices,” he adds.

DAP, MoP and NPK complexes are under nutrient-based subsidy regime, where subsidy is capped irrespective of products.

Indian companies currently get DAP at $677 per tonne and NPK Complexes at $617 per tonne.

The country hugely depends upon imports for DAP and MoP with imports of the order of 7.41 and 6.36 million tonnes in 2010-11. Also, approximately one million tonne of NPK Complexes is also imported.