November 23, 2011

IIFCO requests international suppliers to reduce prices

Indian Farmers Fertiliser Cooperative Limited (IIFCO) has asked international suppliers to bring down the prices of the products they export to the country as the Indian rupee continued to depreciate against the dollar.

"We have sought the lowering of import prices of DAP (Di Ammonium Phosphate), NPK Complexes and MoP (Muriate of Potash) by US$50, US$45 and US$36 respectively. They are seriously considering our demands," said U S Awasthi from the IIFCO.

Currently, India imports DAP at US$677 and MoP at US$490 per tonne from the international suppliers.

"The exchange rate has made our imports is very costlier," said Aswathi. "So, any further depreciation in the rupee would prove counter-productive for us."

As the country's largest fertiliser manufacturer and distributor, IIFCO had raised the prices of DAP fertilisers in this financial year from INR12, 000 (US$230.3) per tonne to INR18, 100 (US$347.4) as the rupee went from INR44 to 49 (US$0.84 to 0.94) per dollar.

"We witnessed demand destruction in the meantime," he recalled. "The farmers are unable to bear this rise. The companies cannot absorb the prices if fertilisers' prices are not increased further."

Analysts fear that the Indian industry may incur heavy loss if the situation persists and it the fertiliser suppliers do not agree to the Indian demands. The Fertiliser Association of India noted that every 10 cent depreciation of the rupee translates into INR75 (US$1.44) per tonne of price rise for DAP. "We have three ways," points out its director-general Satish Chander.

"One is to raise the prices; that we are unwilling to do. Second is to ask the government for subsidy. We don't want to do that. Third is to ask the suppliers to reduce the price because that is what we are doing."

He also said that India was a fertiliser-deficient country and hence "cannot think" of an import holiday.

The fertiliser prices have drastically gone up in the last one year, taking the prices of deregulated fertilisers to as high as over 100 per cent in the case of DAP and over 60% for MoP. India's DAP, MoP and NPK Complex requirement is highly dependent on imports.