West Asia conflict disrupts fertiliser supply, Kharif farmers brace for higher costs

India’s urea production is heavily dependent on LNG imports from Qatar, and with those supplies squeezed, several plants have already cut output.

Naresh Deshmukh, COO of Deepak Fertilisers and Petrochemicals Corp. Ltd, explained the bind the industry finds itself in. “The shipping lanes closure has caused a rise in raw material costs, which has already pushed fertiliser rates higher. In chemical industries, increased costs are passed on to consumers – but in fertilisers, that’s not so straightforward given the subsidy structure. So we are exploring alternative markets,” he said.

But alternatives are proving expensive too. “Russia, one of the key substitute suppliers, has begun raising prices as multiple import-dependent countries turn to it for raw materials. China, which could have provided relief, has restricted exports of fertiliser raw materials and finished goods until August 2026, prioritising its own farmers. The result is a squeeze from multiple directions,” Deshmukh added.

“Now the challenge is how to manage rising production costs,” Deshmukh said. “If this situation persists, the industry will have no choice but to pass on the increase to farmers.”

With the dollar strengthening against the rupee, the cost of upcoming raw material consignments is set to climb further.

For farmers like Kantilal Fadtare from Sangola in Solapur district, the price rise is already there. “DAP has gone up from Rs 1,400 to Rs 1,900 for a 50 kg bag. Water-soluble fertilisers, including Mono Potassium Phosphate, have also risen by around Rs 1,000 per 25 kg bag,” he said.

Fadtare worries this will force difficult choices on farmers ahead of the Kharif season. “High input costs might push farmers to reduce fertiliser application or switch to less nutrient-intensive crops, perhaps soybeans instead of corn. That will affect overall yield and income.”

A structural vulnerability

India’s exposure to these disruptions is more structural. The country is the world’s largest importer of urea. Domestic rock phosphate meets only 10 per cent of requirements, potash is almost entirely imported, and sulphur has limited local availability.

A Parliament Standing Committee on Fertilisers on March 14 warned of acute shortages ahead of the Kharif season, calling for a dedicated Fertiliser Supply Security Fund to reduce import dependence over the long term.

In the near term, the government has acted to limit the damage. After a high-level meeting, it was decided to ensure that fertiliser manufacturers receive at least 70 per cent of their average natural gas consumption over the past six months to keep production running. As per the Department of Fertilisers, the overall fertiliser reserves have also risen 36.5 per cent year-on-year to 177.31 lakh metric tonnes, with DAP stocks at 25.13 LMT and urea at 59.30 LMT.

That buffer may buy some time. But with the conflict showing no signs of resolution, and the Kharif season weeks away, the pressure on farmers, and on the government’s subsidy bill, is only likely to grow.