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Farmers will have to pay Rs 1,900 for a 50-kg bag of di-ammonium phosphate after IFFCO increases rates

Chintu Das
Chintu Das

The country's biggest fertiliser seller, Indian Farmers Fertiliser Cooperative (IFFCO), has increased prices of nutrients sharply in the middle of Assembly polls in West Bengal and continuing demonstrations against the Centre's farm laws. Farmers will pay Rs 1,900 for a 50-kg bag of di-ammonium phosphate (DAP), India's most commonly used fertiliser after urea. This is more than 58 percent more than the current rate of Rs 1,200 per bag.

Other common complex fertilisers with different NPKS (nitrogen, phosphorus, potassium, and sulphur) proportions have also seen large price increases from IFFCO. 10:26:26 (from Rs 1,175 to Rs 1,775 per bag), 12:32:16 (from Rs 1,185 to 1,800 per bag), and 20:20:0:13 (from Rs 925 to 1,350 per bag) are some of them. The new premiums go into practice on April 1st.

According to an IFFCO spokesman, non-urea fertiliser costs have also been deregulated. The cooperative's decision, which comes after other fertiliser firms raised prices since mid-March, has "no political party or administration" behind it.

The above increases are mostly due to foreign markets, which have risen dramatically in the last 5-6 months. In India, the landed price of imported DAP is now about $540 per tonne, up from less than $400 in October. Similarly, intermediates such as ammonia and sulphur have increased in price from about $280 and $85 per tonne to $500 and $220 per tonne. During this time, urea and muriate of potash prices have risen from $275 and $230 per tonne to $380 and $280 per tonne, respectively.

Higher nutrient rates, in particular, represent a resumption of the farm commodities bull market. The UN Food and Agricultural Organization's Food Price Index (FPI) number for March was 118.5 points, the best since June 2014's 119.3 points. In May 2020, at the height of the global pandemic-induced lockdown, the FPI (base year: 2014-16=100) hit a four-year low of 91 points, before rebounding to an 81-month peak now.

The rise in fertiliser rates, in addition to those for gasoline, diesel, and LPG, may have political and economic ramifications. Most of the polling for the West Bengal polls, in which the BJP is attempting to unseat the state's ruling party, the Trinamool Congress, has yet to be done. While the crowds at Delhi's Singhu, Tikri, and Ghazipur borders have thinned, the agitation against Prime Minister Narendra Modi's farm laws is expected to pick up momentum once wheat harvesting and sugarcane planting are completed.

Increased fertiliser prices could make it more difficult for the Reserve Bank of India to keep interest rates down. To pay farmers for the increased cost of fuel and nutrients, the Modi government will be under pressure to raise minimum support prices for crops to be planted in the upcoming kharif season beginning in June. Both eyes will be on the monsoon: if the rains are as strong as they were last year, food prices should remain stable.

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