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Global Prices rise for DAP: Market under pressure

The government of India giving their best efforts to make the availability of phosphatic fertiliser, especially DAP to the farmers at affordable price. The ministry of fertilisers and chemicals tried to prevent farming crises by increasing NBS subsidy on phosphatic fertilisers in May 2021, as international fertiliser prices rise high.

Indian government increased DAP subsidy by 236.84% from Rs. 10,231 to Rs. 24,231 per ton to keep the DAP prices low and to keep MRP, equivalent to MRP of FY 18-19 & 19-20 for farmers despite the rising costs. Department of Fertilisers estimated around Rs 14,775 crore additional subsidy for revised NBS rates for P&K Fertilisers for the year 2021-22.

DAP is applied in the field at the time of sowing for plant root establishment and development.  Despite so many regular efforts by Indian government, will DAP be available for farmers during ongoing season and in rabi 2021-22?

With the normal supplies and availability, India’s DAP consumption is expected 10.65 million tons out of which during Kharif 2021, it is expected 6.51 million tons with 5 years CAGR of 1.46% and 4.14 during Rabi 2021-22. India’s DAP production is hardly 3.8 million tons in FY 2020-21 and 4.5 million tons in FY’2019-20.

DAP Scenario (1st Quarter of FY 2021-22)

Kharif sowing have just started in India. Indian markets have started facing shortage of DAP at the field level. As against the 6.51 million tons of expected DAP consumption during Kharif 2021, the availability is hardly 2.36 million tons, so far. There is a gap of 4.15 million tons. Kharif crop sowing will continue for next 45 days. Will Indian farmers face problem of DAP availability despite continuous efforts by Indian government, increasing DAP subsidy and making additional subsidy budget.

International DAP prices are increasing continuously and are expected to remain high during ongoing Kharif season. US DAP Spot Price (Gulf) for June 21 is US $ 604.75 per ton which is 5.24% more than May 21 prices of US $ 574.63 per ton and 122% more than last year during same month (June 2020 – US $ 273 per ton).

Department of Fertilisers have directed all the companies for making special efforts to ensure availability of DAP fertilisers by increasing production and imports as well. Import takes minimum 60 – 90 days for complete cycle from tendering to placement in the market. India needs special attention and efforts to make availability of DAP in ongoing Kharif season and for coming rabi seasons.