Russian sellers stop offering discounted fertilizers to India
What's the story
Russian companies have stopped offering discounted fertilizers, such as di-ammonium phosphate (DAP), to India due to tightening global supplies.
This move could increase India's import costs and subsidy burden amid a rally in global prices.
India's fertilizer imports from Russia surged 246% to a record 4.35 million metric tons in the 2022-23 financial year, as suppliers provided discounts on DAP, urea, and NPK fertilizers.
Details
This could increase India's import costs
The decision by Russian companies to offer fertilizers at market prices instead of discounted rates could significantly increase India's import costs and subsidy burden.
The current price of Russian DAP is approximately $570 per ton on a cost and freight (CFR) basis for Indian buyers, which is the same price offered to other Asian customers.
Global fertilizer prices have been surging over the past two months, making it challenging for Indian companies to accumulate stocks for the upcoming winter season.
What Next?
Surging global prices challenge India's winter stockpiling
Global fertilizer prices have been surging over the past two months, making it challenging for Indian companies to accumulate stocks for the upcoming winter season when demand for DAP rises for the wheat crop.
In July, global suppliers were offering urea at approximately $300 per ton on a CFR basis, but are now quoting $400 per ton.
DAP prices were around $440 per ton in July.
Insights
Government may boost subsidies to shield farmers
"The global fertilizer prices are rising just before crucial state elections in India. The government has no choice but to increase subsidies to protect farmers," an official from a Mumbai-based fertilizer company told Reuters.
This move will have significant implications for India's agricultural sector, as farmers rely on affordable fertilizers to maintain crop yields and ensure food security for the nation.