The sharp cut in potash prices by Indian Potash Ltd promises many benefits to farmers, companies and the overall agriculture sector. While the price cut will encourage farmers to use more of the nutrient-based product, it will help the industry improve their margins. Speaking to Bloomberg TV India , Venkatram Vasantavada, president - Crop Nutrition Business, Deepak Fertilisers and Petrochemical Corporation Ltd, says the move will help rectify the NPK ratio and improve soil productivity. Fertiliser companies can gauge the impact on their margins once the it starts trickling down by August or September, he said. Excerpts:

How will the cut in potash prices impact the fertiliser sector going forward?

I think it’s a very positive move. It will help farmers improve their NPK (nitrogen, phosphorus and potassium) applications, which is currently lope-sided due to sub-optimal use of urea and NPK. So we hope that soil imbalances will get corrected and that farmers will get it at a competitive price. Crops such as sugarcane, banana, vegetables, onions and potatoes, which largely use it, will be benefitted.

How significant is the import of potash as a percentage of the total feedstock that is used by Indian companies?

Different companies use NPKs in different ratios. We can’t put a number to it or clearly quantify it at this point of time. But I would say that it will positively impact the companies and it could positively impact the NPK sales in the market place.

Will companies cut fertiliser prices on back off the reduction in potash prices or will they use this to boost their margins?

IPL (Indian Potash Ltd) has already announced a price cut. We will have to see how it will go through in the coming months because the industry is also carrying forward huge stocks in the market place. The impact, if any, will start trickling down by August or September.

Core sector data show that fertiliser output has gone up by almost 14 per cent. Will fertiliser prices stabilise after the cut in potash prices?

It’s very difficult for me to comment at this point of time on prices. As I said, different companies will have different cost structures and different NPK ratios. It’s too early to comment. But, definitely, we will see that it will benefit the farmers and the industry.

There have been concerns, from certain sections, over excessive uses of fertilisers. What is your stand on that? Also, what will be the implications on volume growth?

On the back of two successive years of drought, the consumption has been a little subdued. While the monsoon has progressed, it has not progressed up to the expectations in most parts of the country. We are still keeping our fingers crossed in terms of how the fertiliser consumption will look like this year. But we are positive and hope that this will be a good monsoon and farmers will start applying fertilisers as per the recommended dosages. We have always maintained that the NPK ratios got skewed because of greater use of urea. So this kind of price cuts on raw material will definitely improve the NPK balance of the soil.

Talking in terms of benefits, what difference do you see when you sell NPK and when you sell pure potash?

The farmer can use potash independently or use potash in the form of NPK. So when we say use of fertiliser through NPK, it definitely means that the farmer is utilising the other two nutrients important for the soil, which is nitrogen and phosphorus. With NPK, the farmer gets all the nutrients in one complex form, which is more than convenient and also addresses the nutrients requirement of that particular crop.