FM Says Will Try To Ensure No Change In Fertiliser MRP (01-Mar-2010)
Finance Minister Pranab Mukherjee guaranteed that the government would try its level best to ensure that farmers do not have to splurge more on fertilizers next fiscal.
This he said will be possible even though the government has removed the maximum retail price (MRP) system.
However, said that the government will ensure that nutrient based fertilizer prices for transition year 2010-11, will continue to be around the currently prevailing MRPs.
The nutrient based subsidy policy for fertilizer sector would become effective from April 1, 2010.
Currently, the MRP of Diammonium Phosphate (DAP) is Rs 935 a quintal and that of Muriate of Potash (MOP) is Rs 445.50 a quintal.
The urea MRP has been raised to Rs 531 from Rs 483 a quintal from April 1.
Meanwhile, through new fortified products, the policy is likely to promote balanced fertilization and focus on extension services by the fertilizer industry.
This new policy will lead to a rise in agricultural productivity and as a result better returns for the farmers.
The policy, overtime, is likely to lessen volatility in the demand for fertiliser subsidy besides containing the subsidy bill.
Moreover, India produced 199.2 lakh tonnes of urea in 2008-09, 29.9 lakh tonnes of DAP and 68.5 lakh tonnes of complex fertilizers, while imported 56.7 lakh tonnes urea, 61.9 lakh tonnes of DAP and 56.7 lakh tonnes of MOP.
The import of urea is likely to be 44.9 lakh tonnes in 2009-10, 55.6 lakh tonnes DAP and 42.3 lakh tonnes of MOP.
Previously, the Fertilizer Industry stated that the decline in freight charges is not expected to benefit farmers and manufacturers.
But, however, it may help the government in decreasing its subsidy bill marginally.
Fertilizer Association of India Director General Satish Chandra stated that the slash in freight charges on fertilizer will not have any affect on farmers and companies.
Moreover, a consortium, led by Coromandel International and Tata Chemicals, has struck a deal for the import of six lakh tonnes (lt) of muriate of potash (MoP) at $370 a tonne, cost and freight Indian ports.
The industry sources said that the contract has a credit facility of 180-day. If that is factor too, then the effective price would be $362-363 a tonne at 4.5 per cent annual interest.
The imports of six lt at $370 a tonne, contracted with the Canada-based world''s No. 1 potash exporter- Canpotex International - is lower than the $460 a tonne price negotiated by Indian companies last June for the material supplied during July 2009-March 2010.
However, earlier, it was said that India will shift to a nutrient based fertilizer subsidy regime from April 1, 2010, meaning fertilizers with double dose of nutrients will get additional per tonne subsidy.
But, however, the retail prices of the subsidized fertilizers at farmgate level will be decided by the fertilizer companies.
Meanwhile, the government stated that India is not self-sufficient in meeting fertilizer requirement of over 52 million tonnes during 2009-10.
Fertilizer demand is at 52.05 million tonnes for the year 2009-10 stated Minister of State for Chemicals and Fertilizers Srikant Kumar Jena.
The demand during Kharif 2009-10 was at 25.47 million tonnes and 26.58 million tonnes for Rabi.
On the other hand, it was said that the fertiliser industry will need Rs 35,000 crore investments to boost the capacity and meet demand, according to the Fertiliser Association of India (FAI).
It is requirement of instance to produce extra six million tonnes each in urea and DAP fertilizers over the next three years for ensuring food security, Mr K.S. Raju, Chairman, FAI said.
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