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Poor offtake due to erratic monsoon and high prices is leading to a build-up in inventory of non-urea fertilisers such as DAP and NPK complexes.
Consumption of urea has largely been marginally down by 3.5 per cent in the kharif season or the April-August period this year.
However, the consumption of DAP and NPK has witnessed a sharp fall, according to industry estimates.
IFFCO Managing Director and CEO U.S. Awasthi, citing industry estimates, said DAP offtake during kharif was down 29 per cent, while the NPK consumption dropped 27 per cent over last year due to erratic monsoon.
IFFCO, the country’s largest fertiliser producer, witnessed a 32 per cent fall in its DAP sales for the April-August period over last year, while its NPK sales dropped 44 per cent, Awasthi said.
Such a sluggish trend in sales is resulting in inventory build-up, he said, adding that producers, including IFFCO, were going slow on signing new contracts with global raw material suppliers.
Rabi demand
“The existing stocks should take care of demand till December,” Awasthi said.
IFFCO expects demand for the rabi season this year to be almost on par with last year as pick up in rains recently has helped improve soil moisture.
Sales of urea in last rabi stood at 153.89 lakh tonne, while DAP and NPK were 63 lt and 57.36 lt, respectively.
Admitting that DAP and NPK complexes witnessed sluggish offtake this kharif , Satish Chander, Director-General of Fertiliser Association of India (FAI), said the widening price differential between urea and complexes was aiding the trend.
Price differential
While the urea price, controlled by the Government, has remained at Rs 5,362 a tonne, DAP price has shot up to Rs 24,000 – up from Rs 18,000 in the previous year.
NPK has shot up to Rs 22,200 from around Rs 16,000 in April this year.
“Farmers are applying more of urea as it is much cheaper than phosphatic and potassic complexes,” Chander said. Ideally, the price differential between urea and DAP/NPK complexes should be around 1:2, but now the complexes are four-to-five times higher than the urea prices.
Satish Chander expects the rabi demand for fertiliser to pick up.
The early sowing of rabi crops such as wheat and mustard will start in late September or early October.
>Vishwanath.kulkarni@thehindu.co.in
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