Market and product

Fertiliser companies have resorted to an across-the-board Rs 30-35 a bag hike in prices of di-ammonium phosphate (DAP), muriate of potash (MOP) and various complexes.

This follows the Centre`s decision to de-control prices of all non-urea fertilisers with effect from April 1, as part of the changeover to a nutrient-based subsidy (NBS) regime.

“We had given an undertaking to the Government to limit any immediate rise in maximum retail prices (MRP) post-decontrol to Rs 30-35 a bag of 50 kg. Accordingly, we have increased DAP and MOP prices by Rs 600 a tonne,” the Managing Director of Indian Farmers` Fertiliser Cooperative (Iffco), Mr U.S. Awasthi, told Business Line.

In the case of complexes – containing different proportions of nitrogen, phosphorous, potash and sulphur (N:P:K:S) – the country`s leading fertiliser marketer has raised prices of its products such as 10:26:26 and 12:32:16 by Rs 35 a bag or Rs 700 a tonne.

The Murugappa Group-controlled Coromandel International Ltd has opted for a uniform Rs 30-a-bag price increase for all its fertilisers, including DAP, MOP and complexes such as 14:35:14, 20:20:0:13, 10:26:26 and 12:32:16. “We have already started selling at the new rates”, said Dr G. Ravi Prasad, Senior Vice-President (Sales and Marketing), Coromandel.

Mr Kapil Mehan, Executive Director of Tata Chemicals Ltd, confirmed that his company, too, had hiked its prices of DAP sold to farmers.

The only major producer yet to announce higher prices is Gujarat State Fertilisers & Chemicals, though it is also expected to do so in the coming days.

For DAP, the new MRP (excluding local taxes) would work out to Rs 9,950 a tonne, which is 6.4 per cent more than the existing Rs 9,350.

MOP rates have gone up from Rs 4,455 to Rs 5,055 a tonne, translating into an even higher 13.5 per cent rise.

‘Print subsidy amount`

Earlier, the Centre had increased the MRP of urea by 9.9 per cent from Rs 4,830 to Rs 5,310 a tonne from the new fiscal.

Urea remains the only fertiliser under administered price control. The others are now technically ‘decontrolled`.

However, companies have been told to cooperative and not make things politically too hot for the Centre.

The Department of Fertilisers has directed companies to clearly print the retail price along with the applicable subsidy on every bag of fertiliser they sell.

Any sale above the printed rate would be punishable under the Essential Commodities Act, a Department letter issued on March 31 to all State Governments has said.

Political fallout apart, the Centre is also concerned over the nutritional imbalance implications arising from excessive price increases in non-urea prices.

Nutritional concerns

“The nutrient application balance is already now heavily tilted towards urea (N). If DAP or MOP prices shoot up disproportionately after de-control, it will further discourage use of P and K,” sources pointed out.

The Centre has, in fact, constituted a separate Committee under the former Agriculture Secretary, Mr T. Nanda Kumar, to look into the entire gamut of issues surrounding the NBS, price decontrol and soil nutrient balance, including promotion of secondary and micro-nutrients.

The Committee would report directly to the Cabinet Secretary after obtaining inputs from the industry and the Finance, Fertiliser and Agriculture Ministries, the sources added.

(Source:http://www.thehindubusinessline.com/, by Harish Damodaran)