The Department of Fertilisers (DoF) has raised concerns before the Ministry of External Affairs (MEA) over the inability of Indian companies to import potash due to an increase in the prices of the commodity by an international cartel, even as the industry is expected to reach a consensus by the end of this week.
India had been a net importer of potash for several years now and has been buying it at a price on par with China on the basis of landed cost. While China had been able to source it at $400 a tonne this financial year, the international potash cartel led by Canada-based Canpotex has urged India to buy it at $500 a tonne.
The department has drawn MEA’s attention to the issue that since India is now a larger market than China, hence, it should not pay a price higher than what was offered to China. For the government, a higher price would translate into higher subsidy as India is the largest importer of potash at five million tonnes, senior DoF officials told Business Standard.
The world’s largest exporter is Canpotex, an international marketing and distribution company wholly owned by potash producers in Canada’s Saskatchewan province — Agrium Inc., The Mosaic Company and Potash Corporation of Saskatchewan Inc.
The Indian fertiliser industry had been on a “holiday” since April and has stopped importing potash. The government subsidy had been fixed at $400 a tonne, hence technically, a higher cost would translate into raising the farmgate prices or the price at which it would be sold to the farmers. In the current financial year, India had not been able to contract a single tonne of imported potash.
However, according to Satish Chander, director-general of the Fertiliser Association of India, the industry is going to reach a consensus within the next week. “We are still on a holiday but we expect some consensus in the next couple of days,” he said.
In 2008-09, when commodity prices had hit through the roof, India had paid $625 a tonne for potash. Last year, the price was $370 per tonne. India imports its entire potash need of six million tonnes (mt), and accounts for 60 per cent of the world imports. India sources potash from Canada, Russia, Israel and Jordan.
Last week, US Awasthi, managing director, Indian Farmers Fertiliser Cooperative Ltd, had said it was a question of national pride. “We import over six mt of muriate of potash annually, which is more than the 3.5 mt by China. So, why should we have to pay more?” he asked.
During the International Fertiliser Association’s annual meeting in Montreal last month, talks broke down between Indian companies and the international cartel over the Indian companies’ demand to not raise the prices above $420 a tonne, which is the benchmark import parity price fixed by the government to compute the subsidy on potash.
In 2010-11, the government gave a subsidy of Rs 54,976 crore and for the current financial year, the subsidy outgo has been estimated at Rs 49,998 crore.
