Key fertiliser maker slashes prices by 14%

India’s largest manufacturer of fertilizers, IFFCO Ltd, has decided to cut prices of a widely used mix of crop nutrients by nearly 14%, according to a company executive, a move that will help lower farming costs and subsidies in a year of global food crisis which is driven in part by higher costs of agricultural chemicals.

The IFFCO official said it was passing on the benefits of lower costs on the back of higher efficiency in output, savings due to newer technologies, such as nano fertilisers, and increase in domestic production capacity.

The country’s food security is closely linked to sufficient availability of a range of fertilisers. Crop nutrients are subsidized by the government to millions of farmers, which reimburses manufacturers over 80% of the market price for most types in one of the world’s largest consumers and importers.

IFFCO, a cooperative, will lower the price of NPKS, also known as complex fertilizer, by ₹200 to ₹1200 a bag and this will help farmers in the oncoming kharif or summer-sown season, the official said, requesting anonymity because he is not authorized to comment on financial matters.

The Centre’s fertiliser subsidy has been estimated at ₹1.75 lakh crore in 2023-24, down 22.2% from the revised estimates of 2022-23. The country’s spending on food and fertilizer subsidies comprise a tenth of the total government expenditure.

India is aiming to achieve self-sufficiency in output of some fertilisers, such as urea, as several new factories are being opened or planned in the next five years. The Mansukh Mandaviya-led fertilizer ministry in coordination with the external affairs ministry has overseen a slew of long-term bilateral deals at steady prices to minimize price swings in imported raw materials.

Indian firms have for the first time finalised investments in several North African mineral-rich nations, part of measures aimed at hedging against price spirals in fertilisers and volatility.

A big switch to nano urea, a highly efficient form of the chemical and a proprietary product of IFFCO, is proving to be a game changer, helping save costs, the executive cited above said.

“This is a sign of competitive pricing. The cut in complex fertiliser prices will help growers of non-cereals like pulses and mustard the most,” said Abhishek Agrawal of Comtrade.