After a lost Kharif season and a tepid Rabi last year, fertiliser companies are looking forward to a great year. The early onset of monsoon this year is expected to help these companies in early disposal of the huge inventory in the channel and ensure good sales growth, especially for non-urea fertilisers.
“While numbers can’t be given now, with the onset of monsoon, we feel the non-urea fertiliser market will grow well this year,” said Satish Chander, chairman of Fertiliser Association of India.
The monsoon advanced by almost a fortnight this year, and has exceeded expectations so far. According to data released by the India Meteorological Department, overall rainfall till June 19 was 54% above normal.
To be sure, almost 78% of agriculture in the country depends on the summer monsoon, with nearly a third of the cropped area purely rain-fed.
A good monsoon, therefore, signals a good harvest of major crops like paddy, cotton and sugarcane and boosts the prospects of fertiliser companies in the main growing season — Kharif.
According to IMD’s latest forecast, rainfall over the country as a whole is likely to be 101% of its long period average (LPA) for July and 96% of LPA for August, both with a model error of ±9%.
This is much better than the rainfall experienced last year.
“Last year, due to poor rains, phosphatic or non-urea fertiliser sales were hit as urea, which is lesser in cost, was a better option for farmers due to anticipation of a strain in earnings,” said Salil Garg, director – corporates, India Ratings & Research, a Fitch group company.
While it is too early to give out numbers, this year will certainly be better for non-urea companies, he said.
Chambal Fertilisers, Coromandel Fertilisers, IFFCO, Tata Chemicals and GSFC are among India’s main non-urea companies.
Non-urea fertilisers, which primarily refer to di-ammonium phosphate and some other variants of potassium and phosphorus, cost more and are likely to find even fewer takers.
In fact, the Rabi season, which largely depends on reservoir water to support wheat crops, is also expected to be robust due to filling up of most rain-fed reservoirs and expectation of refill sooner than earlier.
The Rabi season starts from November and stretches till February.
If the rainfall during the Kharif season is poor and reservoirs are not filled, there isn’t enough water to support Rabi crops. Hence, farmers tend to go slow on fertiliser purchases.
In fact, another reason which is likely to give a boost to non-urea manufacturers is that urea prices too are expected to be hiked in the near future. If that happens, farmers who go for heavy urea purchases due to strong rainfall, will also switch to non-urea.
Urea is the most consumed fertiliser in the country, accounting for around 55% of the 55 million tonne per annum fertiliser market. DAP is the second-most preferred fertiliser, with a share of 20%.
Complex fertilisers, which employ various combinations of nitrogen, potassium and phosphorus, account for 15% of the market. Potash-specific fertilisers bring up the rest.
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