Fertiliser sales have not been impacted by cash crunch so far

Only in urea were sales, at 26.89 lt last month, marginally lower than the 27.37 lt for November 2015.

Written by Harish Damodaran | New Delhi | Updated: December 22, 2016 4:49 am
crops, farmers, fertiliser sales, festiliser sale, demonetisation, monsoon, agriculture ministry, crop economy, agricultural economy, india news A lot of fertiliser sales are currently taking place on credit.

Demonetisation of high-value currency notes does not seem to have majorly affected fertiliser sales.

According to the Department of Fertilisers, sales of di-ammonium phosphate (DAP) amounted to 11.89 lakh tonnes (lt) in November, an increase of 29.5 per cent over the 9.18 lt for the same month of last year. Sales of muriate of potash (MOP) and complexes (fertilisers with varying proportions of nitrogen, phosphorous, potash and sulphur), likewise, went up by 71.8 per cent (from 2.06 lt to 3.54 lt) and 7.5 per cent (from 6.97 lt to 7.49 lt), respectively.

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Only in urea were sales, at 26.89 lt last month, marginally lower than the 27.37 lt for November 2015. But sales of this most widely consumed fertiliser in India had registered a dip even during the kharif season (April-September). That decline has continued in the ongoing rabi season from October, which may have less to do with the November 8 demonetisation decision as much as two other factors.

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The first of these is the NDA government’s policy to make neem-coating mandatory for all urea sold in the country. Normal urea is prone to nitrogen loss on account of leaching (underground percolation) and volatilisation (escaping into atmosphere). Neem-coating enables slow release of nitrogen, thereby improving urea consumption efficiency, apart from controlling illegal diversion of the fertiliser for non-agricultural uses. The second reason could be the expansion in pulses acreage this year. Being leguminous crops that naturally ‘fix’ atmospheric nitrogen, pulses require less urea application.

So, hasn’t demonetisation been a factor at all? “Farmers aren’t aggressively purchasing, which one would have expected, especially with the soil moisture and weather conditions being conducive this time after two consecutive drought years. Also, domestic prices have fallen significantly between April and September — from an average of Rs 27,880 to Rs 22,949 per tonne for DAP and from Rs 16,980 to Rs 11,393/tonne for MOP. Both together should have substantially lifted sales. If that hasn’t really happened, it means demonetisation has had some role,” said an industry source.

Moreover, a lot of fertiliser sales are currently taking place on credit. “We normally offer material to dealers on 30-day credit. This time, companies are extending it to 60 or even 90 days, which the dealers are also passing on to farmers, who obviously are in no position to make cash purchases,” the source pointed out, adding that a clearer picture of demonetisation’s impact would be available once the sales data for December is out.

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