Government to Reimburse Fertiliser Companies for Rising Production Expenses

Without raising the subsidy component, the Union Fertiliser Ministry will devise a method to reimburse the industry for the greater cost of production it would incur in producing fertilisers. 

Mansukh Mandaviya, the Union Minister for Chemicals and Fertilizers, said this during a meeting in New Delhi to discuss fertiliser supplies for the rabi season, according to sources. 

Subsidies will not be increased, but a method will be devised to bridge the gap between rising production costs and maintaining DAP's existing selling price, he added. 

The government, on the other hand, is not considering any support for the manufacturing of complex NPK (nitrogen, phosphorus, potassium) fertilisers, which are likely to affect crop nutrition balance, he added. 

The Minister also requested that fertiliser manufacturers increase output in order to ensure enough supplies throughout the upcoming rabi season. Prior to the start of the rabi planting season next month, the government requested the industry, including public sector businesses, to normalise supplies of diammonium phospate (DAP) through increased production and imports. 

Uncertain Future 

Fertiliser firms are crossing their fingers because there is no clear strategy for how the compensation system would function. Their worries come from rising logistical and transportation expenses caused by the inability to bring in consignments owing to a lack of vessels and containers. Shipping prices have nearly doubled, causing production expenses to rise. 

Fertiliser demand is robust in the United States and Brazil, with a dramatic rise in corn and soya bean planted area and record prices for both crops. 

As a result, fertiliser demand in these nations has remained strong, restricting global supply and driving fertiliser prices to decade-high levels. Because native resources are limited, the Indian fertiliser sector relies on imports to satisfy demand. 

Farmers in the northern and central states are anticipating a record harvest of wheat, mustard, potato, onion, sugarcane, and maize, which require more fertiliser, after having difficulty getting fertiliser last season owing to Covid logistical limitations.