A SIGNIFICANT drop in fertiliser sales — despite lower prices, a fairly good monsoon, and the Agriculture Ministry projecting an all-time-high kharif foodgrain and oilseeds production this year — has left both the industry and policy-makers stumped.
Fertiliser firms sold 143.71 lakh tonnes (lt) of urea during April-September, 7.2 per cent below the 154.80 lt for the corresponding kharif season period of 2015.
But it isn’t only urea, the most widely used fertiliser in India. Even sales of di-ammonium phosphate (DAP) and complexes (fertilisers with varying proportions of nitrogen, phosphorous, potassium and sulphur) have dipped — from 50.73 lt to 42.06 lt (17.1 per cent) and from 43.08 to 39.97 lt (7.2 per cent), respectively.
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“This is unprecedented, considering we have had a normal southwest monsoon this time, resulting in a higher kharif-sowing area of 3.7 million hectares over last year. And with the record output of kharif cereals (126.33 million tonnes), pulses (8.70 mt) and oilseeds (23.36 mt), it should have translated into increased fertiliser offtake,” said G Ravi Prasad, president (Corporate Affairs), Coromandel International Ltd, India’s largest private phosphatic and complex nutrients manufacturer.
There was a decline in prices, too. Between the last rabi and the current kharif season, the maximum retail price for a 50-kg bag of DAP fell from Rs 1,200 to Rs 1,100, net of taxes.
Other fertilisers — for instance, muriate of potash (from Rs 800 to Rs 550) and the popular complex 20:20:0:13 (from Rs 950 to Rs 900 per bag) — also saw reductions, enabled by easing international prices.
Over the last one year, landed prices of imported DAP have plunged from roughly $460 to $330 per tonne, while similarly coming down from $332 to $227 for potash and from $275 to $200 for urea.
“Low prices should have further stimulated demand. The fact that they haven’t adds to the puzzle,” said Prasad.
Ashok Dalwai, additional secretary, Ministry of Agriculture & Farmers Welfare, attributed the negative sales growth in urea partly to the 29.1 per cent jump in pulses acreage this year. Being leguminous plants, whose root nodules harbour bacteria that naturally ‘fix’ atmospheric nitrogen, pulses not only require less urea but also can save roughly one bag per hectare for the succeeding crop.
But a more important reason, according to him, was the government’s policy to make 100 per cent neem-coating mandatory for both domestically manufactured and imported urea. Normal urea is prone to nitrogen loss on accounting of ‘leaching’ (underground percolation) and ‘volatilisation’ (escaping into the atmosphere).
“Neem-coating can control these by ensuring slow release of nitrogen. It has further stopped illegal urea diversion for non-industrial uses like plywood and melamine manufacture,” said Dalwai.
Prasad agreed that neem-coating would have led to improved urea consumption efficiency. “Farmers may have previously been applying urea once in, say, ten days. But with the crop retaining greenness for a longer time due to slow nitrogen release, the frequency of application could have reduced to 15 days. So, instead of three bags for an acre of paddy, they need to be buying only two,” he said.
But that still does not explain why sales of other fertilisers, too, have taken a hit. Pulses, for instance, may not need nitrogen, but do require phosphorous.
U S Awasthi, managing director, Indian Farmers Fertiliser Cooperative (Iffco), the country’s largest nutrient maker, said that the overall sluggish sales may have also had to do with droughts in the last two years.
“The rains may have been good this time, but many farmers probably had no money to buy fertilisers. It is possible that they may have also had stocks from purchases last year that couldn’t be used because of drought,” said Awasthi. Iffco reported 20.6 per cent lower sales of urea and 24.8 per cent of DAP and complexes in kharif 2016 compared to the same season of 2015.
“The consecutive droughts have dented not only farmers’ incomes, but also confidence levels. The government should help restore it through proper implementation of the Pradhan Mantri Fasal Bima Yojana, so that they are encouraged to invest in productivity-raising inputs again,” he said.
There is also concern about whether fertiliser sales may have been affected because of inadequate credit availability for farmers this season.
Official figures on seasonal agricultural operation loans are not available, but the industry believes that crop credit flow has suffered, both from public sector banks having to make higher provisions against non-performing assets and farmers’ own accounts turning irregular due to back-to-back droughts.