IFFCO, the country’s largest fertiliser maker, expects a 25-40 per cent drop in demand for non-urea fertilisers in the current year.
This is mainly on account of the recent hike in prices of non-urea complexes such as di-ammonium phosphate (DAP) and others, prompted by the falling rupee and a weak demand due to scanty monsoons.
“The DAP off-take is 50 per cent down so far. Even if the rains improve, we will see a demand destruction of at least 25-40 per cent,” said Dr U.S.Awasthi, Managing Director, IFFCO.
The co-operative, like other private sector fertiliser makers, has increased the maximum retail price of DAP to Rs 24,000 a tonnes from June 1, to offset the impact of a falling rupee.
“The weakening rupee is the biggest challenge faced by IFFCO. Each 10 paise fall in the rupee against the dollar has an impact of Rs 45 a tonne for DAP,” Dr Awasthi said.
The rupee has tanked by about 26 per cent against the dollar since April 2011 till date. Since the beginning of current financial year, the rupee has fallen by 12.7 per cent.
The sluggish off-take in the ongoing kharif season has prompted IFFCO to reduce manufacturing of DAP by about 25 per cent. The imports of DAP have been stopped since January this year. Despite this, our stockyards are full, Dr Awasthi said.
Stating that there is enough DAP stock to meet the current kharif sowing demand Dr Awasthi said, “Farmers should look for stocks with earlier prices of Rs 18,000 a tonne printed on the bags before purchasing the new stocks”. The co-operative through its member societies is creating awareness among farmers in this regard, he said.
The widening gap between urea and non-urea fertiliser prices would lead to imbalance in application as farmers would prefer to use the cheaper urea, Dr Awasthi said. Urea prices currently rule at Rs 5365 a tonne. IFFCO expects the urea sales to continue to grow by 3-4 per cent this year, Dr Awasthi said.