Fertiliser sales comes to a standstill

NEW DELHI, MAR 14: Thanks to the uncertainty due to pressure on the BJP-led Government from its allies for rolling back hiked fertiliser p...

NEW DELHI, MAR 14: Thanks to the uncertainty due to pressure on the BJP-led Government from its allies for rolling back hiked fertiliser prices, sales of fertilisers like urea, diammonium phosphate (DAP) and complex potassic fertilisers have come to a virtual standstill across the country.

While the slump in urea sales is on account of the uncertainty arising out of the expected roll-back of prices, offtake of potassic and phosphatic fertilisers has been affected owing to administrative lapses on behalf of the Government.

Even two weeks after the Budget announcements, the Agriculture Ministry which is supposed to issue the administrative notification regarding the new fertiliser subsidies and prices for the decontrolled phosphatic and potassic fertilisers has failed to do so till date. While the Agriculture Ministry has not notified the new prices or subsidies for complex fertilisers containing nitrogen, potash and phosphates in them, in the case of DAP and MoP while prices have been notified the new ad hoc subsidies have not been notified by the ministry.

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The Agriculture Ministry is in charge of the administrative policies regarding fertilisers and is supposed to notify the new ad hoc subsidies on phosphatic and potassic fertilisers. Even though these fertilisers have been decontrolled since 1992, the Government continues to announce subsidy rates of them on an ad hoc basis, following which the manufacturers fix the ceiling price announced by the government and recover their remaining costs through subsidy claims from the Government.

Normally, the new prices should have been notified by the Agriculture Ministry soon after the Finance Minister announced a 15-per cent increase in prices of urea and complex fertilisers and a seven per cent increase in prices of DAP in his Budget presentation on February 29.

As a result of the Budget announcements, prices of urea were raised to Rs 4,600 per tonne from March 1, Rs 600 up from the pre-Budget prices.

DAP prices were supposed to be Rs 8,900, up from Rs 8,300 per tonne at the pre-Budget level. Prices of complex fertilisers like muriates of potash (MoP) were supposed to be up from Rs 3,700 per tonne to Rs 4,225 per tonnes after the Budget.

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“Manufacturers cannot fix their own prices under the Fertiliser Control Order unless the Agriculture Ministry notifies the exact subsidies in the case of DAP, MoP and complexes and prices of complexes,” says Pratap Narayan, director-general of Fertiliser Association of India (FAI), the apex body representing the Fertiliser Industry.

“As a result, dealers are not keen to pick up stocks and sales across the country have slumped. This the last thing the industry needed at a time when it is already facing a liquidity crunch on account of pending subsidy payments from previous years,” Narayan added.

States where late wheat sowing takes place at this time of the year especially Maharashtra, West Bengal and the northeast have been badly affected by this drop in sales. Also, marketing federations of various states who plan their stock purchases at this time, are finding it difficult to buy fertilisers.