Prices of urea in India are cheaper compared to other major agrarian countries

The Fertilizer Association of India (FAI), on Thursday, claimed that nearly 5-6 million tonnes of urea was being illegally diverted for non-farm use and smuggled to Nepal and Bangladesh due to lack of rational pricing policy between various fertilizers.

“Urea in the country is so cheap that around 15-20 per cent of the crop nutrient is being diverted for non-farm uses, and is also smuggled to neighbouring countries like Pakistan, Bangladesh, Nepal and Burma,” FAI Chairman A. Vellayan told journalists at a press conference here.

The country consumed about 30 million tonnes of the key nitrogenous fertilizer in the 2011-12 fiscal. “This is happening because there is no rational price parity between the prices of urea and that of phosphatic and potassic (P&K) fertilizers like di-ammonium phosphate (DAP) and muriate of potash (MoP),’’ Mr. Vellayan said. He said prices of urea in India were cheaper compared to other major agrarian countries. In the U.S., urea is priced at around $526 per tonne, in the Philippines $577 a tonne, in China costs $295 and in Pakistan $266 a tonne. In India, however, it is priced at $96 a tonne.

Zuari Industries Executive Vice-President H. S. Bawa said due to high global prices of DAP and MoP and rupee depreciation, P&K fertilizer prices had gone up but that of urea were stable at Rs.5,310 per tonne since April 2010, forcing farmers to opt for urea. As per government data, the retail price of MoP rose by 92 per cent to Rs.23,100 in the current kharif (summer) season from Rs.12,040 per tonne in the 2011-12 rabi (winter) season, while DAP prices rose by 33 per cent to Rs.26,500 from Rs.20,000 per tonne in the same period. “The best way to bring rational price parity is to move to a policy regime where subsidy is a fixed amount per kg of nutrient for all nutrients and in all fertiliser products, and MRP floats in line with market prices,” he added.

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