Lofty fertilizer prices….
The fertilizer prices are witnessing a continuous hike on account of various factors.
Firstly, the gas curtailments have caused reduced production hence resulting in
increased urea prices. Secondly, hoarders are hoarding fertilizers (DAP and Urea),
waiting for the right time to release the stocks and gain on high offers. Thirdly, the vast
fields which were destroyed by the devastating floods are now gradually being revived
by the farmers who are trying hard to make good the losses they suffered, hence
subsequently increasing demand of the fertilizers. Fourthly, it is imperative to check
the smuggling of fertilizers which creates shortages in the country and tends to
increase local prices.
One major drawback of the soaring urea and DAP prices is the burdened farmers who
are being trampled by the hoarders. This pressure of increasing prices on the farmers is
causing a decrease in demand for DAP and Urea. But one can argue that the contracted
demand is not majorly affecting sales as even with the reduction in demand our local
production of urea is so low that the government feels the need to import it every
year. Infact recently the government needs surged to 1mn tons import of urea for the
Rabi season in order to meet the farmers’ requirements.
The DAP prices are currently at Rs4050/50kg bag with urea prices rising to
Rs1234/50kg bag. A further increase is expected as gas supply from SNGPL would be
stopped from August 28, 2011 to September 17, 2011, on account of maintenance of
Qadirpur gas field. However, this hike in price would offset the decline in production
caused by gas shortages and increase sales revenue for the fertilizer companies.
The fertilizer prices are witnessing a continuous hike on account of various factors.
Firstly, the gas curtailments have caused reduced production hence resulting in
increased urea prices. Secondly, hoarders are hoarding fertilizers (DAP and Urea),
waiting for the right time to release the stocks and gain on high offers. Thirdly, the vast
fields which were destroyed by the devastating floods are now gradually being revived
by the farmers who are trying hard to make good the losses they suffered, hence
subsequently increasing demand of the fertilizers. Fourthly, it is imperative to check
the smuggling of fertilizers which creates shortages in the country and tends to
increase local prices.
One major drawback of the soaring urea and DAP prices is the burdened farmers who
are being trampled by the hoarders. This pressure of increasing prices on the farmers is
causing a decrease in demand for DAP and Urea. But one can argue that the contracted
demand is not majorly affecting sales as even with the reduction in demand our local
production of urea is so low that the government feels the need to import it every
year. Infact recently the government needs surged to 1mn tons import of urea for the
Rabi season in order to meet the farmers’ requirements.
The DAP prices are currently at Rs4050/50kg bag with urea prices rising to
Rs1234/50kg bag. A further increase is expected as gas supply from SNGPL would be
stopped from August 28, 2011 to September 17, 2011, on account of maintenance of
Qadirpur gas field. However, this hike in price would offset the decline in production
caused by gas shortages and increase sales revenue for the fertilizer companies.
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