Prices of complex fertilizers, including DAP, rise up to 58 per cent; farmers get a jolt

A huge increase in the prices of decontrolled fertilizers (non-urea) has given a shock to the farmers even before the Kharif season begins. With the rise in prices of raw material in the international market, the Indian Farmers and Fertiliser Cooperative Limited (IFFCO), the largest fertilizer producer and marketer in the country, has increased the prices of decontrolled fertilizers by 45 to 58 per cent. A 50-kg bag of di-ammonium phosphate (DAP), the most widely consumed fertilizer in India after urea, will cost farmers Rs 1,900, which is more than 58 per cent higher than the existing rate of Rs 1,200 per bag. This is the highest-ever rise in fertilizer prices in recent decades.

The rise in fertilizer prices may continue further because the rupee has highly depreciated against the dollar. The fall of Rs 1.13 per dollar on Wednesday may put pressure on fertilizer-producing and -importing companies to raise prices. The price of imported DAP has now gone up to Rs 550 dollars per tonne. However, amidst this price rise, IFFCO has said that it has an old stock of 11.26 lakh tonnes of complex fertilizers and this will be sold at the earlier prices. Besides, IFFCO said that it was also holding talks on the prices with the raw material suppliers in the international markets.

The farmers’ movement is going on in a large part of the country. The rise in fertilizer prices will only add to their resentment. Besides, it could have repercussions on the Assembly elections being held in West Bengal. Also, the ruling BJP may have to bear the brunt of the farmers’ resentment in the upcoming panchayat elections in Uttar Pradesh. Farmers will be more in need of fertilizers in the next couple of months. And it is then that they will feel the shock of the rise in prices.

In an inter-departmental letter sent on April 7, IFFCO has informed of a huge increase in prices. According to the letter, besides DAP, IFFCO has also significantly increased the maximum retail prices of other popular complex fertilizers with different NPKS (nitrogen, phosphorus, potash and sulphur) proportions. These include NPK 10:26:26 (from Rs 1,175 to Rs 1,775 per bag), NPK 12:32:16 (from Rs 1,185 to 1,800 per bag) and NPS 20:20:0:13 (from Rs 925 to 1,350 per bag). The price of NPK 15:15:15 will be Rs 1500 per bag. The new prices are effective from April 1.

Sources in the fertilizer industry told RuralVoice that there has been a huge increase in the prices of fertilizers and their raw materials in the international market in the last six months or so. The price of imported DAP has reached $550 per tonne at present while it stood at $400 per tonne in October, 2020. Similarly, the prices of ammonia and sulphur have gone up from $280 to $500 per tonne and from $85 to $220 per tonne respectively. The price of murate of potash has gone up from $230 to $280 per tonne while that of urea from $275 to $380 per tonne.

There has been sharp criticism from farmer organizations and political parties immediately after IFFCO issued the new fertilizer prices. Besides, it has been turned into a political issue in the ongoing Assembly elections in West Bengal.

Amidst this criticism, IFFCO has said that the change in prices has nothing to do with politics. The fertilizer prices are directly affected by the prevailing prices of raw materials at the international level. As far as the new prices are concerned, they will not apply to the old stock. IFFCO says that the price of complex fertilizers is free from control and, therefore, bears no relation to any political party or government. The prices mentioned by IFFCO for complex fertilizers are only temporary. Companies are yet to give the final shape to the international prices of raw materials, which are experiencing a bull cycle.

“Being a manufacturing organization, we have to mark the price on bags in order to dispatch the new material processed by our plants. The price mentioned in the letter is only a temporary price quoted to be displayed on bags, which is essential. IFFCO ensures that sufficient material is available in the market at the earlier prices and the IFFCO marketing team has been instructed that only goods packed with the earlier prices mentioned be sold to the farmers. We always hold the farmers’ interest paramount while taking any decision.” IFFCO has a 32.1 per cent share in the phosphatic fertilizers produced in India and 21.3 per cent in nitrogenous fertilizers. It has five fertilizer plants in India. It is the largest and most prominent institution in the fertilizer sector in the country.

This rise in fertilizer prices will not send the right message to the farmers. As far as other fertilizer companies are concerned, they had increased the prices in March itself but their increase was lesser than the recent one by IFFCO. The government offers subsidies on decontrolled fertilizers under nutrient-based subsidy (NBS). It has not fixed the NBS rates as yet despite the continuous increase in the prices of raw materials in the international market. Earlier, the production cost of the farmers has gone up, thanks to the rise in diesel prices. Given this scenario, the government may have to increase the Minimum Support Price (MSP) of Kharif crops. With the rise in inflation already being there, the government will be under pressure as to how to strike a balance on this issue. The rise in fertilizer prices is quite a sensitive issue and it may have an adverse impact in the elections. West Bengal chief minister Mamata Banerjee had already turned the rise in LPG and petroleum prices into an election issue.