Harish Damodaran
The institution of a nutrient-based subsidy (NBS) regime from April 1 has given a huge boost to consumption of complex fertilisers.
During April-November, fertiliser firms have sold 7.07 million tonnes (mt) of complexes, containing varying proportions of nitrogen (N), phosphorous (P), potash (K) and sulphur (S). This represents a one-third jump over the 5.32 mt for the corresponding eight months of 2009-10.
Conventional fertilisers
On the other hand, sales of conventional fertilisers such as urea and di-ammonium phosphate (DAP) have registered a mere 5-6 per cent increase, while being negative in muriate of potash (MOP).
“Complex sales will easily top 10 mt this fiscal,” said Dr G. Ravi Prasad, President (Fertiliser Marketing) at Coromandel International Ltd (CIL). In 2009-10, CIL manufactured around two mt of complex fertilisers, which was next to the 2.75 mt by the Indian Farmers Fertiliser Cooperative (Iffco).
Besides these two, the K.K. Birla Group-controlled Pradeep Phosphates and Zuari Industries (0.8 mt), Fertilisers & Chemicals Travancore (0.75 mt), Rashtriya Chemicals & Fertilisers (0.5 mt), Tata Chemicals (0.4 mt), GSFC (0.3 mt), GNFC (0.2 mt) and Deepak Fertilisers & Petrochemicals Corporation (0.1 mt) are the major producers of complexes.
According to the industry, the introduction of NBS – linking subsidy payable to the nutrient composition of individual fertilisers – has made complexes attractive to both companies as well as farmers. This is unlike the earlier regime, where subsidy was limited to specific products (urea, DAP, MOP) with little linkage to nutrient content.
Under the NBS, the Centre is now providing a per-kg concession of Rs 23.227 on nitrogen , Rs 26.276 on phosphorous , Rs 24.487 on potash and Rs 1.784 on sulphur . These translate into a respective subsidy of Rs 15,521 and Rs 15,114 a tonne on the two most popular complexes, 10:26:26:0 and 12:32:16:0, enabling them to be retailed at Rs 8,200 and Rs 8,650 a tonne. Lower prices (against Rs 9,950 for DAP) and the presence of K (DAP only contains ‘N' and ‘P', albeit at 18 and 46 per cent) makes them a value proposition.
Companies, in turn, have responded by augmenting production of complexes. Iffco's Kandla plant manufactured 0.7 mt of DAP in 2009-10, whereas this year, “we are hardly making any DAP and bulk of its 2.4-2.5 mt output will consist of 10:26:26:0 and 12:32:16:0”, informed Mr Arabinda Roy, Marketing Director, Iffco.
Apart from DAP, even potash is being increasingly sold in the form of complexes rather than as MOP. “That probably explains declining sales of MOP. Although MOP imports are higher this time (six mt against 5.3 mt in 2009-10), a significant part of it is going for manufacture of complexes,” he added.
Higher complex sales
The other reason for higher complex sales is imports, adding to the overall availability. The extension of NBS benefits to imported material has led to over 1.1 mt of complexes – mainly 10:26:26:0, 16:16:16:0, 16:20:0:13 and 20:20:0:0 – being brought in from Russia, China and Indonesia during April-November, compared with just 0.2 mt in the whole of 2009-10.
Interestingly, the import of complexes have been undertaken not just by Iffco, Zuari and Deepak Fertilisers, but even by companies such as Nagarjuna Fertilisers & Chemicals and Indian Potash Ltd that do not manufacture them domestically.
The other major fertiliser to have benefited from the NBS is single super phosphate (SSP), which, on account of its lower 16 per cent phosphorous content, has faced steady marginalisation from DAP. But with the NBS recognising the 11 per cent sulphur content in SSP, this fertiliser, too, has become a marketing proposition.
“I foresee SSP consumption to touch 3-3.5 t this year and also more production capacity being added,” said Dr Prasad.
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