Farmers to Pay the Price of Tariff Fight with Trump

It’s not just high fuel costs; farmers are also grappling with rising fertiliser prices, mainly non-urea complexes such as di-ammonium phosphate (DAP) and muriate of potash (MoP), this kharif season.

DAP and MoP have risen over the past few months tracking an increase in the international prices of raw materials. The rupee, which has fallen 7 per cent since January, has also made imports of these decontrolled fertilisers costlier.

The industry also fears that the Centre’s move to impose safeguard duty on imports of phosphoric acid from the US may turn counterproductive. India imports around 2.4 mt of phosphoric acid, of which imports from the US are estimated to be 200,000 tonnes. The bulk of the imports are from Morocco, Senegal and Jordan.

As part of the retaliatory measures against the US, the government has hiked the duty on phosphoric acid to 20 per cent from 5 per cent. “The higher duty on US products may push up the prices of phosphoric acid from other origins,” an industry source said. Phosphoric acid prices are currently at around $730 a tonne, having risen $150 from a year ago.

Fertiliser-makers have revised DAP prices three to four times over the past six months in tandem with the rising global prices of phosphoric acid, the main ingredient. Retail DAP prices have risen by 18-20 per cent since January. Compared with the corresponding period last year, the prices of DAP and MoP are up 24-27 per cent.

IFFCO, the largest player, which sold a 50 kg DAP bag at an MRP of ₹1,091.5 in January, is now selling the nutrient at ₹1,290 a bag; others are selling a bag at ₹1,350. The price of the popular complex 10:26:26 sold by IFFCO is now ₹1,160 per 50 kg bag as against ₹1,056 in January.

Sources said the increase in subsidy under the Nutrient Based Subsidy scheme this year has not helped offset the price hike of inputs. “We don’t have any option, but to pass on the price increase to the farmers,” a source said.

Sales likely to be hit

The fertiliser industry fears that the rise in prices of the decontrolled fertilisers will have a negative impact on offtake, unless the monsoon is widespread across the country. Low farm-product prices are hurting the realisations of farmers and have reduced their purchasing power, which the industry fears will hit demand. With the monsoon’s progress slow and the rise in global prices, Indian Potash Ltd is still assessing the demand to conclude MoP import contracts, said Managing Director PS Gahlaut. “The price situation is not favourable for India,” he said.

India imports around 4.5 million tonnes of MoP annually. Gahlaut said the country has stocks of around 2 mt, which will help meet kharif season demand.

DAP sales stood at 8.98 mt in 2017-18, marginally higher than the previous year. India imported 4.22 mt of DAP during the year, with domestic production at 4.65 mt. The offtake of other complexes was estimated at 8.24 mt.