Global prices of Di-Ammonium Phosphate (DAP), the second most consumed fertilizer in India after urea, have surged by more than $50 per tonne over the past two weeks, raising concerns over timely availability for the upcoming kharif season.
DAP prices in the international market are currently hovering between $720 and $730 per tonne, up from $665 to $670 per tonne about a fortnight ago, according to industry sources. Prices may rise further after Brazil reportedly struck deals at $740 per tonne, particularly with Saudi Arabian producer Ma’aden.
India consumes around 10 million tonnes of DAP annually, with the bulk of its requirement met through imports. Roughly 40 percent of imports comprise raw materials used for domestic production, while about 60 percent is imported as finished fertilizer.
Brazil Buying, China’s Export Curbs Add Pressure
Industry sources say global prices are firming up amid expectations of strong Indian demand and aggressive buying by Brazil. Brazil has reportedly secured large volumes at elevated prices, including deals with Saudi Arabia’s Ma’aden at up to $740 per tonne.
Additionally, export restrictions imposed by China, a major global DAP exporter, are tightening supplies and exerting upward pressure on prices.
India has entered into long-term supply agreements with Russia and Saudi Arabia’s Ma’aden to ensure stable DAP availability. A long-term pact with Russia covers 600,000 tonnes. However, sources indicate that Russia did not supply the contracted volumes in February and is now proposing shipments in mid-April. Imports arriving in April may pose logistical challenges in ensuring timely availability for the kharif sowing season.
Meanwhile, Ma’aden is currently prioritizing Brazil over India for supplies, adding to market uncertainty.
Importers Await NBS Rates
The current price volatility has left importers in a dilemma. A key reason is the government’s subsidy framework under the Nutrient-Based Subsidy (NBS) scheme.
Under the NBS system, the government fixes per kilogram subsidy rates for nutrients such as Nitrogen (N), Phosphate (P), Potash (K), and Sulphur (S). Based on import and production costs and the notified subsidy rates, companies are allowed to set the Maximum Retail Price (MRP) of decontrolled fertilizers.
The government announces NBS rates separately for the rabi and kharif seasons. Companies assess the viability of imports or production based on these rates and determine the MRP accordingly.
Although non-urea fertilizers are officially decontrolled, the MRP of DAP is effectively under indirect government control. The MRP of DAP has remained unchanged at Rs 1,350 per 50-kg bag for the past three years. The gap between the fixed MRP and the rising import or production cost is compensated by the government through subsidies. A substantial portion is covered under the NBS scheme, while additional losses are addressed through special incentives.
The government has assured the industry that it will bridge the gap between import costs and the MRP. However, most importers are waiting for the revised NBS subsidy rates applicable from April 2026 for the upcoming kharif season before committing to large import contracts.
Industry Seeks Long-Term Policy
Industry sources told Rural Voice that the current subsidy mechanism often hampers timely fertilizer availability. They argue that a long-term and predictable subsidy framework, similar to the system for urea, would ensure smoother supply.
Urea remains a fully controlled fertilizer, with the government regulating its pricing, imports, and distribution. Companies are reimbursed the entire difference between the MRP and the cost of production or import.
Limited Immediate Impact
Despite the sharp rise in global prices, the immediate impact on the farmer-level price of DAP is expected to remain limited, given the fixed MRP and government assurances on subsidies.
However, prices of other complex fertilizers have risen in recent years. Reduced availability of DAP has already led to higher consumption of alternative complex fertilizers.
For the government, another pressing challenge is promoting balanced fertilizer use. Data from the previous year indicate that the consumption ratio of N, P, and K nutrients has significantly deteriorated. Urea consumption remains more than double the ideal level, undermining efforts to encourage balanced nutrient application in Indian agriculture.