New Delhi, First Published Mar 5, 2022, 3:18 PM IST
Fertilizer prices in India are likely to rise sharply due to Russia’s ongoing war on Ukraine. There are reports that the price of potash, especially in the manufacture of fertilizers, may go up
Russia’s ongoing war on Ukraine has led to sanctions imposed by the United States, the European Union, Canada and Japan. They have decided to break the backbone of the country’s economy by not importing any goods from Russia.
Many cities in Ukraine have been devastated by the attack. It may take years for those cities to regenerate and return to normalcy. Thus the possibility of export from Ukraine is also low.
But for India, potash, the raw material for fertilizers, is mostly bought in Belarus from Russia. Russia and Belarus are the world’s leading suppliers.
Of these, Ukraine, Russia and Belarus together account for 12 per cent of India’s potash imports. Prior to this, India used to import potash from Belarus through Russian ports. Russia’s current embargo faces a number of challenges
Although potash is widely produced in Canada, the Government of Canada has refused to increase production due to environmental concerns. Thus, there is a shortage of potash supply. Thus the cost of imports is expected to rise to $ 500 to $ 600 per metric ton. But at present it is only $ 280 per metric ton.
As the price of fertilizer rises, the federal government will have to subsidize it to control it. Thus, the government will be forced to allocate more than the amount of subsidy allocated for fertilizer in the budget.
Rohit Ahuja, head of research at the ICRA Research Institute, said: With the price already high, the cost of subsidizing the central government will increase. Only then can fertilizer be provided to farmers at concessional rates. As the price of potash rises, so will the price of fertilizer in India. ”
Nitin Jain, director of Crisil Ratings, said: “The Ukraine-Russia war could affect fertilizer imports. Therefore, if the Central Government gives tax exemption on the import of fertilizer, the price can be reduced. Most of the fertilizers like urea, DAP, MOP and NPK come to us from Russia.
The embargo on Russia will severely affect these imports. The fertilizer subsidy in the budget will not be enough due to rising prices, ”he said
Last Updated Mar 5, 2022, 3:18 PM IST