Fertiliser firms call for urgent reforms in urea policy, raising prices

Industry body Fertiliser Association of India (FAI) on Friday called for urgently increasing urea prices as well as for reforms to the government’s urea policy.

The last time urea prices were raised by 10 per cent was in 2010, while subsidised urea for agricultural use is sold at Rs.5,310 per tonne.

Addressing media persons in New Delhi, FAI Secretary General Satish Chander said, “Increase in MRP of urea and extension of NBS (Nutrient Based Subsidy) scheme to urea are urgently needed.”

“Expenditure Reforms Commission recommended in year 2000 to increase farmers’ price of urea by 7 per cent every year from 2001 to 2006 to bring it up to Rs.6900 per tonne. This recommendation has still not been implemented,” added Mr. Chander.

A few months ago, the union cabinet sent back the proposal of the department of fertilisers to raise urea prices by 10 per cent.

Mr. Chander said urea prices could be raised and the same subsidy could be diverted to phosphatic and potassium-based fertilisers, which would result in lowering of prices for P and K fertilisers along with promoting balanced nutrient use.

The FAI Secretary General also emphasised the urgent need to extend the Nutrient Based Subsidy scheme to urea.

The government introduced NBS for P and K fertilisers in April 2010, which deregulated the fertiliser prices while the subsidy component for them was fixed on per kg of nutrient basis.

Prices of non-urea fertilisers have drastically gone up since the implementation of NBS for non-urea fertilisers in 2010.

FAI pointed out that the prices of P and K fertilisers had risen sharply during 2011-12 due to rise in international prices of fertiliser and raw materials and for the big depreciation of the rupee against the US Dollar.

Potassic fertiliser Muriate of Potash (MoP) has gone up by Rs.3307 per tonne from Rs.27,219 to Rs.30,526, during the period.

FAI co-chairman Rakesh Kapur said that apprehensions of spiralling urea prices if NBS is extended to it are unfounded as gas prices in the country are regulated and it is the main input for urea production.

FAI said that faced with rising global prices firms have asked the government to create a Sovereign Wealth Fund of $20 billion to acquire mineral assets abroad, “We have asked the government to form a Sovereign Wealth Fund (SWF) of $20 billion to acquire fertiliser assets abroad in the wake of rising global prices and shortage of fertilisers on the domestic front,” Mr. Chander said.

He said dependence on imported raw materials for domestic fertiliser production is making the industry susceptible to international price fluctuations, while global suppliers have formed cartels and they are increasing the prices.

India imports 100 percent of its potash and 90 per cent of its DAP requirements.