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August push: Monsoon recovery spurs nutrient sales

Monsoon rains have recharged the groundwater and filled up reservoirs. That, along with companies reducing prices, should help prop fertiliser demand.

Written by Harish Damodaran |
Updated: August 29, 2019 7:00:33 am
Monsoon recovery spurs nutrient sales Fertiliser industry sources expect sales to go up further in the coming months for two reasons.

The monsoon’s spectacular catch-up after a very poor start has spurred a recovery in fertiliser sales as well.

Data from the Department of Fertilisers shows retail sales of urea, di-ammonium phosphate (DAP), muriate of potash (MOP) and NPKS complexes (containing different combinations of nitrogen, phosphorous, potash and sulphur) to have been lower in May, June and July, compared to their last year’s levels for the same months.

An extended dry spell and rainfall in June — the opening month of the southwest monsoon season — turning out 32.8% below the normal long-period average (LPA) led to poor nutrient offtake by farmers. But July saw the country as a whole receiving 4.6% above average rains, with the surplus even higher, at 19.1%, in the current month so far. Cumulative all-India area-weighted rainfall during June 1 to August 28 has been 0.5% more than the corresponding LPA.

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As a result, the gap between the total area planted under kharif crops this year vis-à-vis the corresponding coverage for 2018 has narrowed to just 2.3%, as on August 23. It was a whopping 26.7% till July 5. The pickup in sowing is also reflected in fertiliser purchases. Sales of urea, DAP and NPKS fertilisers this month have higher relative to last year, with only MOP registering a marginal dip (see table).

Indian fertiliser industry, Indian monsoon, Indian farmers, fertiliser sale in India, India news, Indian express The lowering of MRPs by most companies has been partly in response to falling international prices.

Fertiliser industry sources expect sales to go up further in the coming months for two reasons.

The first is, of course, the monsoon’s late revival, which has substantially bolstered the soil moisture regime as well as enabled water levels in India’s major reservoirs to reach 73.3% of their live storage capacity as on August 22. This is more than corresponding 60.8% figure for 2018 and the last 10-years’ average of 57.8 % for this date. The beneficial impact of it will be felt particularly in the upcoming rabi cropping season from October.

The second reason for the likely higher fertiliser demand is prices. Since October 15, last year, the country’s leading nutrient manufacturer-cum-seller, Indian Farmers’ Fertiliser Cooperative, has slashed its maximum retail price (MRP) for DAP from

Rs 29,000 to Rs 25,000 per tonne. It has also effected similar reductions in NPKS complexes — from Rs 27,300 to Rs 24,000/tonne for 10:26:26, from Rs 27,500 to Rs 24,200 for 12:32:16 and from Rs 21,300 to Rs 20,000 for 20:20:0:13.

The lowering of MRPs by most companies has been partly in response to falling international prices. Average landed prices (cost plus freight) of imported DAP this month have been $ 346 per tonne, against $ 429 a year ago. The landed rates of 10:26:26 and 20:20:0:13 have, likewise, eased from $ 365 to $ 358 and $ 303 to $ 290 per tonne, respectively.

Moreover, the Narendra Modi government has kept the per-tonne subsidy in 2019-20 unchanged from last year’s levels of Rs 10,402 for DAP, Rs 8,739 for 10:26:26 and Rs 8,917 for 12:36:16, while marginally raising it from Rs 7,177 to Rs 7,286 for 20:20:0:13. Companies have passed on the benefit of unchanged subsidy rates, over and above lower cost of imported fertilisers and raw material/intermediates, to farmers. That should, in turn, help prop up nutrient demand in the coming months.

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First published on: 29-08-2019 at 01:30:47 am
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