Companies raise complex fertilizer prices; NPK bag dearer than DAP by Rs 500

Giving a jolt to the farmers at a time when Rabi season sowing is about to start, fertilizer producer companies have increased the prices of several complex fertilizers, including NPK, by up to more than Rs 500 per bag (50kg). This has resulted in the prices of Nitrogen, Phosphate and Potash (NPK) complex fertilizers going up to Rs 1,750 per bag. The NPK (12:32:16) bag of public sector National Fertilizer Ltd (NFL) and cooperative institution Krishak Bharati Cooperative Ltd (KRIBHCO) will now sell at Rs 1,700 while private company Smartchem has fixed the price of the bag with the same NPK ratio at Rs 1,750.

What is significant is that the NPK bag of the Indian Farmers Fertiliser Cooperative Ltd (IFFCO), the country’s largest fertilizer producer cooperative, is still priced at Rs 1,185 — it has not raised the price. Besides being marked on the packing of the companies’ bags, the prices mentioned in a letter to the District Marketing Officers from Madhya Pradesh State Cooperative Marketing Union also corroborate this. The letter says that the new prices have become applicable from October 1, 2021.

Under Nutrient-Based Subsidy (NBS), the government grants subsidies on the basis of nutrients for non-urea decontrolled fertilizers and companies are allowed to fix their own prices. The industry says that companies have raised fertilizer prices only due to an increase in raw material prices in the global market. Industry sources say that phosphoric acid prices have gone up by $240 per tonne and this has led to costs going up by Rs 10,000 per tonne. If the government does not increase the subsidy on nutrients, other companies, too, will soon have to increase their prices.

The price of another complex fertilizer 10:26:26 has gone up for Coromandel to Rs 1,475 per bag while for IFFCO it stands at Rs 1,175 per bag.    

For another of the complex fertilizers, viz Ammonia Phosphate Sulphate (NPS) 20:20:0, the prices have gone up to Rs 1,300 per bag. IFFCO prices are the lowest at Rs 1,150 per bag. Earlier, IFFCO was selling it at Rs 1,050 per bag and only recently has it increased the price by Rs 100 per bag. In Madhya Pradesh, the IFFCO price stands at Rs 1,150 per bag while the Coromandel price is Rs 1,225 per bag.

Industry sources say that the prices of all nutrients, including phosphoric acid, potash and nitrogen, have increased steeply over the last one year. Among these, the rise of phosphoric acid prices has been the steepest and they have now reached $1,400 per tonne. However, it is also a fact that Diammonium Phosphate (DAP), which contains 46 per cent phosphate, is priced at Rs 1,200 per bag while the price of NPK with 32 per cent phosphate has shot over Rs 1,700. Until recently, the NPK prices have been lower than those of DAP.

When companies increased the DAP prices from Rs 1,200 per bag to Rs 1,800 per bag in April, the government went for a massive increase in phosphate subsidy. In the May 20 notification, it increased the subsidy to Rs 14,000 per tonne so that DAP bag prices might continue at the older level of Rs 1,200. The DAP subsidy has gone up to Rs 24,231 per tonne.

The per kilo subsidy rates of Nitrogen (N), Phosphate (P), Potash (K) and Sulphur (S) were declared under the NBS in the notification issued on the evening of May 20, 2021, by the Department of Fertilisers. Under the new subsidy rates, the phosphate subsidy was increased from Rs 14.888 per kg to Rs 45.323 per kg.  The subsidies on nitrogen, potash and sulphur were retained at the same level as in the notification issued on April 3, 2020. That is, in the May 20 notification, the subsidy on nitrogen continued at Rs 18.789 per kg, that on potash at Rs 10.116 per kg and on sulphur at Rs 2.374 per kg.

Thus, the government increased the subsidy at that time only on phosphate while nutrients like ammonia and potash continued to enjoy the same subsidy as earlier. The companies, at that time, did not go for any hike in the prices of fertilizers made from these nutrients. Besides, the notification said that the new subsidy rates had been fixed only till October 31, 2021.

Despite the steep increase in the prices of fertilizer nutrients in the international market, the government has not increased the subsidy on them. Although there were meetings on this issue in the Department of Fertilisers to review the situation and companies were assured that they would not have to incur losses, there has been no decision as yet. As a result, a steep decline has been registered in the imports of these fertilizers and their raw materials, and on August 31, 2021, their domestic inventories had dipped to a three-year low.

Industry sources say that the fertilizer availability situation has not improved much. There have even been reports of fertilizer scarcity from some states. The sowing of Rabi crops is all set to start in full swing. And if there is a scarcity of complex fertilizers at this juncture, farmers will be in big trouble, because NPK, DAP and other complex fertilizers are used on a large scale at the time of sowing.