Inventories likely to keep fertiliser sales down

The country's record urea production in 2015-16, along with high import of others, means fertiliser sales in the rabi season could be down because of a lot of inventory with dealers.

Total fertiliser subsidy arrears are also not expected to be down much by the end of 2016-17, despite low gas and imported urea prices -- the budgeted amount has been used.

Satish Chander, director-general, Fertilizer Association of India (FAI), said from April to October (first seven months of this financial year), sale of urea dropped 12.2 per cent from the same period last year. That of DAP and NPK fell by 12.2 per cent and 7.3 per cent, respectively, despite record sowing during the kharif season and a good southwest monsoon. The reason was that retailers' inventory was at an all-time high.

"A final picture on rabi season sales will come around the end of December but initial projections show the trend of fall in sales due to high inventory is on," said Chander.

He said as of November 20-24, sale of DAP was around 1,000 tonnes less than last year. That of urea and MOP was short by 70,000 tonnes and 900 tonnes, respectively.

Fertiliser inventory in the country as on April 1 was estimated to be 5.5-6 million tonnes, against a requirement of 1-1.5 mt. The excess impacted sales during kharif sowing and might do so in the rabi season, too.

Rabi crops are sown in end-October and November, with harvesting from January on. Kharif crops are planted in June and harvested from September.

Fertiliser companies also criticised the Centre's experiment on Direct Benefits Transfer as flawed, delaying subsidy clearance. "The model does not credit the subsidy into the bank account of the beneficiary as soon as a bag is purchased but instead does the same into the account of companies, which then takes days to get reimbursed from the Centre," said Rakesh Kapur, chairman of FAI.

Instead of helping the companies, the process has further delayed our payments and in districts where the experiment is on, October dues, too, haven't been cleared, he added.

FAI has also demanded that the government implement its decision to increase the fixed cost of urea by Rs 350 a tonne. "Fixed cost under the urea pricing and subsidy scheme continues to be reimbursed on the cost data of 2002-03. There has been a significant increase since then," it said.

It said there had been no adverse impact of demonetisation on sales.