New Delhi: The government may monitor on a monthly basis the prices of non-urea fertilizers to determine the reasons for the rising cost of soil nutrients such as di-ammonium phosphate (DAP) and muriate of potash (MoP).
DAP sellers have been making “unreasonable” profits in the range of Rs.3,000-5,000 per tonne, junior fertilizer minister Srikant Kumar Jena wrote in a 4 August note to fertilizer secretary Ajay Bhattacharya, explaining the rationale behind the proposed move. Mint has seen a copy of the letter.
Even after the recent depreciation of the rupee and the cost of hedging are accounted for, the price of DAP should be around Rs.21,200 per tonne, according to the note, while the firms were selling the product at Rs.24,000-26,500 a tonne. “Similar profiteering is also seen in the case of complex fertilizers, wherein fertilizer firms are making an additional profit of around Rs.4,500 per metric tonne,” the note said.
DAP prices have risen to about Rs.24,000-26,500 a tonne from about Rs.9,000 in April 2010 and MoP prices have increased to Rs.17,000 per tonne from Rs.4,500. Photo: Pradeep Gaur/Mint
India imports a major portion of?all?non-urea fertilizers it needs. The domestic demand for DAP is 11-12 million tonnes (mt) a year, the second highest after urea. While 6-6.5 mt DAP is imported, the rest is produced locally. MoP demand stands at 5-6 mt, nearly all of which is imported.
Prices of non-urea fertilizers had been freed in April 2010. DAP prices have risen to about Rs.24,000-26,500 a tonne from about Rs.9,000 in April 2010 and MoP prices have increased to Rs.17,000 per tonne from Rs.4,500.
The government might soon begin monitoring the prices of non-urea fertilizers on a monthly basis. Mint’s Aman Malik and Professor Sudhir Panwar of Lucknow University tell us more.
“Such a price increase has meant that the offtake of DAP has seen a sharp decline among farmers,” said Sudhir Panwar, a professor at Lucknow University and an expert on farm issues. “Such a steep increase defeats the entire purpose of deregulation of prices, which was meant to increase the use of non-urea fertilizers and promote balanced soil fertilization.”
This is the third such note Jena has sent to Bhattacharya. The minister, in two earlier letters, had raised issues related to the sale and distribution of fertilizers and the rising prices of non-urea fertilizers in the country, Mint reported on 19 July and 2 August.
On 30 July, a standing committee on fertilizers headed by Bharatiya Janata Party parliamentarian Gopinath Munde had questioned fertilizer ministry officials on the price rise.
“By decontrolling retail prices of P&K (phosphatic and potassic) fertilizers, it was never the intention of government that the firms are at their free will to gain undue profits at the cost of poor farmers, and if it so, then government should stop providing subsidy on decontrolled fertilizers,” Jena said in his 4 August note.
Fertilizer firms are not profiteering, said Satish Chander, director general of lobby Fertiliser Association of India, refuting Jena’s charge. The industry is not making a margin of more than 2% on DAP and MoP, Chander said. “We have given our entire costing to the government, which is anyway in public domain,” he said. “There is no case of making excessive profits.”
Jena has also questioned the fact that the port handling of imported urea, which is brought on government account, is being done by private firms, and that they are selling the same under their own brand names. “Therefore, it is desirable that only PSUs (public sector units) should be given charge of handling the urea imported on government account, else the entire imported urea can be handed over to states/state cooperatives for marketing,” he said in the latest note.