Fertilizer is getting expensive
India now has to spend more money than before in purchasing fertilizers required for farming. There has been a huge jump in the prices of Diammonium Phosphate (DAP) and India has signed a deal to buy it at about 40 percent more than the pre-war levels. The main reason for this is believed to be the ongoing tension in the Middle East and increasing pressure on the supply chain. The question is whether this will also affect the prices of flour, rice and pulses?
According to ET report, Indian Potash Limited will deliver 7.05 lakh tonnes of DAP fertilizer at the rate of $ 930 per tonne for delivery on the west coast. Whereas for the East Coast, 6.41 lakh tonnes of fertilizer will be purchased at the price of $935 per tonne. This price is much higher than in February. In February, the spot price of DAP in India was around $667 per tonne.
Connection of fertilizer to farming
If fertilizer becomes expensive then the cost of farming increases. Farmers use fertilizers extensively in crop production. In such a situation, if the government does not increase the subsidy, it may have a direct impact on the farmers. However, at present the government gives subsidy on DAP to the farmers, due to which the full inflation in the market does not reach the farmers. The crisis in the Middle East is also important because a large part of the global supply of sulfur used in phosphate fertilizers comes from this region. If there is any kind of obstruction in the Strait of Hormuz, the supply may be further affected, due to which the prices of fertilizers may increase further.
purchase of urea
India has also recently made a large purchase of urea. According to the report, India has purchased 25 lakh tonnes of urea, for which it had to pay almost double the price compared to earlier. This purchase has taken place at a time when the monsoon season is about to start in the country and farmers are preparing to sow crops like paddy, maize and soybean. Now the big question is whether this will make the plates of common people expensive? If fertilizer remains expensive for a long time, the total cost of farming will increase. Its effect may gradually be visible on the prices of flour, rice, pulses and other food items. However, the final impact will depend on how much the government increases the subsidy and how the global situation plays out in the coming months.
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