Indian fertilizer producers agreed to lower maximum retail prices for DAP, MOP and NPKs, effective July 4. The Indian government called the move an important step to encouraging farmers to balance their fertilizer use.
The government announced initially DAP manufacturers RCF and NFL agreed to lower the price of DAP by Rs2,500/mt (US$37/mt) and MOP by Rs5,000/mt (US$74/mt). The price of the fertilizers affected by this announcement have been dropping, as have other commodities.
Other domestic manufacturers have agreed to match the announced prices.
The MRP for DAP in May 2016 was Rs23,343/mt (US$345/mt) compared to a May 2015 price of Rs29,990/mt (US$446/mt).
India recently signed a contract with Belarussian Potash Company for potash imports at $227/mt CFR, a $105/mt reduction from the 2015 contract price.
The government said farmers consume 10 million mt/year of DAP, 2.5 million mt of MOP and 9 million mt of NPK.
In the past, the price of the three fertilizers was allowed to rise based on market supply and demand. Subsidies to help farmers afford the fertilizers were calculated under the Nutrient Based Subsidy plan implemented a few years ago. Urea was the only fertilizer exempted from the NBS. As a result, urea prices remained low – about US$80/mt – while the prices for the other fertilizers fluctuated.
The government has been looking for ways to encourage less urea use and more of the other fertilizers. Efforts to raise the price of urea has been met with strong political opposition.