Ample
monsoon rains and higher prices of farm goods are likely to lift Indian
fertiliser demand in 2010/11 by 13 percent to a record 60 million
tonnes, testing local fertiliser makers’ ability to raise output in sync
with the demand, industry officials said.
India’s June-Sept
monsoon rains, a key factor in determining food grain production and
fertiliser demand in the country, were 2 percent above normal in the
current year, weather office data showed. "Fertiliser demand will be
more this year. Total demand may rise up to 60 million tonnes," Udai
Shanker Awasthi, managing director of Indian Farmers Fertiliser
Co-operative Ltd (IFFCO), the biggest fertiliser producer in the
country, said.
In end-July, when
monsoon rains were below normal, Awasthi was expecting the country’s
fertiliser consumption to rise by 5 percent, but higher rains during
August-September erased rains deficit and boosted summer-sown crops. See
India’s summer-sown grains output is likely to rise by 10 percent on
year, oilseeds production by 17.3 percent, cotton by over 10 percent and
cane production is likely to increase by 17 percent, the government
said last month.
"Soil moisture level
is very good due to higher rains in September. It is likely to boost
output of rabbi (winter-sown) crops," said Harish Galipelli,
vice-president research with JRG Wealth Management. Farm minister Sharad
Pawar last month said, "this will be one of the most favourable years
for wheat and other crops." Output of wheat, the main-winter sown crop,
is likely to rise to a record 82 million tonnes in 2010/11, a farm
ministry official said.
"When water
availability is good, farmers like to maximise their acreage, especially
where there are no irrigation facilities and fertiliser usage rises,"
said R.S. Nanda, Chief Operating Officer, Nagarjuna Fertilizers &
Chemicals. The government is also encouraging farmers to boost
production of food grains as the country with a population of 1.2
billion is struggling to calm double-digit food inflation. Farmers’
shift towards cash crops like cotton and cane, which require more
fertilisers than oilseeds and lentils, is also boosting fertiliser
demand, said J. Kohareswaran, chairman and managing director, Rashtriya
Chemicals & Fertilizers.
Bountiful rains have
also replenished water reservoirs, a key source of irrigation water
during winter season, encouraging farmers to sow winter crops on larger
area. Water level in India’s main reservoirs was at 75 percent of
capacity in the week to Sept. 30, higher than the 10-year average,
government data showed. "Farmers are getting good returns from kharif
(summer-sown) crops. Obviously, they will invest more in seed and
fertilisers during rabi season," Galipelli said.
But many industry
officials were sceptical about domestic fertiliser makers’ capacity to
cater to spiralling demand. "We have to see how supply side responds.
Many times farmers agitate due to fertiliser scarcity. It will be tough
task for fertiliser makers to fulfil the demand," said Ashwini Bansod, a
senior analyst at MF Global Commodities India.
Lowerdomestic
production may force the country to raise overseas purchases . India
imports nearly a third of its fertiliser requirement, with potash and
phosphate constituting the bulk of it. Awasthi said imports are likely
to be slightly higher this year.
monsoon rains and higher prices of farm goods are likely to lift Indian
fertiliser demand in 2010/11 by 13 percent to a record 60 million
tonnes, testing local fertiliser makers’ ability to raise output in sync
with the demand, industry officials said.
India’s June-Sept
monsoon rains, a key factor in determining food grain production and
fertiliser demand in the country, were 2 percent above normal in the
current year, weather office data showed. "Fertiliser demand will be
more this year. Total demand may rise up to 60 million tonnes," Udai
Shanker Awasthi, managing director of Indian Farmers Fertiliser
Co-operative Ltd (IFFCO), the biggest fertiliser producer in the
country, said.
In end-July, when
monsoon rains were below normal, Awasthi was expecting the country’s
fertiliser consumption to rise by 5 percent, but higher rains during
August-September erased rains deficit and boosted summer-sown crops. See
India’s summer-sown grains output is likely to rise by 10 percent on
year, oilseeds production by 17.3 percent, cotton by over 10 percent and
cane production is likely to increase by 17 percent, the government
said last month.
"Soil moisture level
is very good due to higher rains in September. It is likely to boost
output of rabbi (winter-sown) crops," said Harish Galipelli,
vice-president research with JRG Wealth Management. Farm minister Sharad
Pawar last month said, "this will be one of the most favourable years
for wheat and other crops." Output of wheat, the main-winter sown crop,
is likely to rise to a record 82 million tonnes in 2010/11, a farm
ministry official said.
"When water
availability is good, farmers like to maximise their acreage, especially
where there are no irrigation facilities and fertiliser usage rises,"
said R.S. Nanda, Chief Operating Officer, Nagarjuna Fertilizers &
Chemicals. The government is also encouraging farmers to boost
production of food grains as the country with a population of 1.2
billion is struggling to calm double-digit food inflation. Farmers’
shift towards cash crops like cotton and cane, which require more
fertilisers than oilseeds and lentils, is also boosting fertiliser
demand, said J. Kohareswaran, chairman and managing director, Rashtriya
Chemicals & Fertilizers.
Bountiful rains have
also replenished water reservoirs, a key source of irrigation water
during winter season, encouraging farmers to sow winter crops on larger
area. Water level in India’s main reservoirs was at 75 percent of
capacity in the week to Sept. 30, higher than the 10-year average,
government data showed. "Farmers are getting good returns from kharif
(summer-sown) crops. Obviously, they will invest more in seed and
fertilisers during rabi season," Galipelli said.
But many industry
officials were sceptical about domestic fertiliser makers’ capacity to
cater to spiralling demand. "We have to see how supply side responds.
Many times farmers agitate due to fertiliser scarcity. It will be tough
task for fertiliser makers to fulfil the demand," said Ashwini Bansod, a
senior analyst at MF Global Commodities India.
Lowerdomestic
production may force the country to raise overseas purchases . India
imports nearly a third of its fertiliser requirement, with potash and
phosphate constituting the bulk of it. Awasthi said imports are likely
to be slightly higher this year.