June 26, 2012

India's IFFCO anticipates non-urea fertiliser sales drop of 25-40%

A drop of 25-40% in demand for non-urea fertilisers is being expected by IFFCO, the country's largest fertiliser maker, in the current year.

This is mainly on account of the recent hike in prices of non-urea complexes such as di-ammonium phosphate (DAP) and others, prompted by the falling rupee and a weak demand due to scanty monsoons.

"The DAP off-take is 50% down so far. Even if the rains improve, we will see a demand destruction of at least 25-40%," said USAwasthi, Managing Director, IFFCO.

The co-operative, like other private sector fertiliser makers, has increased the maximum retail price of DAP to INR24,000 (US$421) a tonne from June 1, to offset the impact of a falling rupee.

"The weakening rupee is the biggest challenge faced by IFFCO. Each 10 paise fall in the rupee against the dollar has an impact of INR45 (US$0.79) a tonne for DAP," Awasthi said.

The rupee has tanked by about 26% against the dollar since April 2011 till date. Since the beginning of current financial year, the rupee has fallen by 12.7%.

The sluggish off-take in the on-going kharif season has prompted IFFCO to reduce manufacturing of DAP by about 25%. The imports of DAP have been stopped since January this year. Despite this, our stockyards are full, Awasthi said.

Stating that there is enough DAP stock to meet the current kharif sowing demand Dr Awasthi said, "Farmers should look for stocks with earlier prices of INR18,000 (US$316) a tonne printed on the bags before purchasing the new stocks". The co-operative through its member societies is creating awareness among farmers in this regard, he said.

The widening gap between urea and non-urea fertiliser prices would lead to imbalance in application as farmers would prefer to use the cheaper urea, Awasthi said. Urea prices currently rule at INR5,365 (US$94) a tonne. IFFCO expects the urea sales to continue to grow by 3-4% this year, Awasthi said.