India’s fertilizer companies have finalized import deals for around 1.5 million tons of Di-Ammonium Phosphate (DAP) for the ongoing kharif season amid growing concerns over global supply disruptions triggered by the continuing West Asia conflict and the prolonged US-Iran tensions.
Industry sources said the impact of the geopolitical crisis has sharply pushed up global fertilizer prices and disrupted the supply chain of key raw materials. Before the conflict escalated in February, DAP prices in the international market were hovering around $720-730 per ton. However, the tenders approved by India for supplies to the western and eastern coasts have reportedly been finalized at around $920 and $930 per ton, respectively.
According to fertilizer industry sources, exporters had offered DAP supplies in the range of $920-1000 per ton. Earlier, the government had also approved urea import deals for around 2.5 million tons at prices between $935 and $959 per ton. Before the conflict, urea imports were being sourced at nearly $435 per ton.
The sharp rise in import prices is expected to significantly increase the government’s fertilizer subsidy burden during the current financial year.
Sources familiar with the matter said two major global suppliers, Morocco-based OCP Group and China, are largely absent from the current DAP supply arrangements. India has instead sourced supplies from multiple alternative origins.
Industry executives told Rural Voice that China is currently not exporting DAP. Meanwhile, Morocco, which possesses some of the world’s largest rock phosphate reserves, is reportedly facing production constraints because of a shortage of sulfur due to the Gulf conflict. Sulfuric acid, produced using sulfur, is a key input in DAP manufacturing.
Fertilizer Stocks Comfortable, But Production Slows
The Indian government recently stated that total fertilizer stocks in the country stood at 19.965 million tons, higher than 17.858 million tons during the same period last year. The current inventory includes 7.665 million tons of urea, 2.252 million tons of DAP, 6.042 million tons of NPK fertilizers, 2.699 million tons of Single Super Phosphate (SSP), and 1.307 million tons of Muriate of Potash (MOP). The government has projected total fertilizer consumption during the kharif season at 39.054 million tons.
However, the crisis has also affected domestic fertilizer production. Between March 1 and May 10 this year, India’s total fertilizer output declined to 7.678 million tons from 9.201 million tons during the same period last year. Urea production fell to 4.628 million tons from 5.498 million tons a year ago, while NPK output dropped sharply to 1.557 million tons compared to 2.203 million tons last year. SSP production also declined to 873,000 tons from 944,000 tons. DAP production, however, rose slightly to 620,000 tons from 556,000 tons during the same period last year.
LNG Supply Disruptions Hit Fertilizer Manufacturing
Industry officials said the availability of ammonia has emerged as a major challenge for domestic fertilizer production. Ammonia is a key raw material for urea, DAP, and complex fertilizers.
India’s LNG imports, which are critical for fertilizer manufacturing, have reportedly declined sharply because of disruptions in supplies from Gulf countries. Qatar has traditionally been India’s largest LNG supplier, but ongoing tensions in the region have severely affected shipments.
Officials believe that higher imports of finished fertilizers may help stabilize domestic availability during the peak kharif demand period.
Farmers Begin Feeling the Pressure
The emerging fertilizer crisis is also beginning to affect farmers at the ground level. Amid rising subsidy costs and expensive imports, Prime Minister Narendra Modi has urged farmers to reduce the use of chemical fertilizers and promote natural farming practices. However, the immediate impact of such efforts remains uncertain.
Reports from several states indicate that the sale of urea is being restricted. Ramkumar, a farmer from Saharanpur district in Uttar Pradesh, told Rural Voice that fertilizer sale centers are limiting urea purchases to only two bags per farmer, which is inadequate for current crop requirements.
Sugarcane cultivation currently requires significant urea application, while demand for fertilizers is expected to rise sharply within a month as paddy translanting for the kharif season gains momentum. Farmers fear that continued restrictions on urea sales could create serious difficulties during the peak sowing period.
National Framework on Subsidized Fertilizer Sales
An empowered group of secretaries had recently decided that the Agriculture Ministry would prepare a national framework for the sale of subsidised fertilizers. The framework is expected to define the quantity and procedure for fertilizer distribution to farmers.
However, the proposed framework has not yet been released, adding to uncertainty among farmers and fertilizer dealers ahead of the crucial kharif season.