After reducing the potash subsidy by 7 per cent and phosphorus by 8 per cent in the 2022-23 rabi season, the Government has decided not to succumb to the pressure of global firms, which have been dictating prices since India imports the entire quantity of muriate of potash (MoP) and over 60 per cent of di-ammonium phosphate (DAP), sources said.

Industry experts see a considerable reduction in the nutrient-based subsidy for kharif 2023 from the rabi levels – Rs 98.02/kg for Nitrogen, Rs 66.93/kg for phosphorus, Rs 23.65/kg for potash and Rs 6.12/kg for sulphur.

“Global prices of both potash and phosphorus have softened from that in October-November last year and the government has facilitated some Indian companies to enter into long-term contracts to source imported fertilisers. Both these factors will help reduce the subsidy,” said a top official with a leading firm.

Complaint of high prices

Fertiliser Secretary Arun Singhal told businessline that global potash prices have declined – from $590/tonne to $422/tonne now. “As prices start cooling down, naturally we can think of a reduction in price. But that will happen gradually,” Singhal said, responding to a query that plantation farmers are complaining about high prices of MoP.

“As of now, we have been providing about 60 per cent subsidy on MoP. Whether it should be more is a different question. But there is another school of thought which says there should be no subsidy on commercial plantation. Because they say it makes sense when a poor farmer gets subsidy, but not on a commercial plantation,” Singhal said.

While DAP is sold at about Rs 1,350 per 50 kg bag, MoP costs farmers Rs 1,700-1,750 a bag. This price differential also led to higher consumption of DAP last year, some experts said. Sales of DAP have increased 15 per cent to 101.35 lakh tonnes (lt) and that of MoP have declined by 35 per cent to 15.21 lt during April-February of the current fiscal from the year-ago period.

Ample availability

Officials said imported urea has come down to $330/tonne (FOB, China) in the last tender from an average $475/tonne in February and $665/tonne in October 2022. Similarly, imported DAP prices (CFR, Mumbai) have declined to about $650/tonne now, from about $760/tonne in October 2022.

Cherian M George, CEO, Harrisons Malayalam Ltd, said potash availability for tea plantations in Kerala is comfortable thanks to adequate provisions made by the Governmentin the last fiscal. However, rising prices of imported potash are hurting the sector, with rates reaching ₹33 per kg against ₹18.

At the same time, summer showers in the high ranges have facilitated usage of potash and its price rise is forcing planters to explore other options such as molasses, wood ash, etc, in tea gardens to replace imported raw material.

Related Topics