Farmers may have to shell out more for widely-used fertiliser di-ammonium phosphate (DAP) this kharif season as the government has decided to allow companies to hike the maximum retail prices of the farm nutrient by more than Rs 600 a tonne.
“The Cabinet has approved the proposal. Now, fertilizer companies are free to raise DAP prices beyond Rs 600 a tonne,” a senior fertiliser ministry official told media.
A notification in this regard will be issued next week, the official said.
Experts sadi retail prices of DAP could go up slightly as a result of this decision because global prices of the farm nutrient have risen by 5-10 per cent.
The hike prices comes amidst the busy kharif sowing season (started June) and there is an acute shortage of DAP.
Fertiliser companies have been shy of importing the fertiliser because of high global prices. While the benchmark price is fixed at USD 612 per tonne (on which they get import subsidy), internatinal prices are much higher than this. The goverment has also restricted the companies from increasing retail prices beyond Rs 600 a tonne.
Fertiliser companies have so far contracted for import of 6 million tonnes of DAP, of which only 1.5 million tonnes has arrived, as against over 2 million tonnes in the year-ago period, said a senior ministry official.
The official said the removal of the restriction would boost domestic supply of DAP in the ongoing Kharif season as the fertiliser companies are free to pass on high global
prices to consumers.
The annual requirement of DAP in India is about 11-12 million tonnes. Over 8 million tonnes is met through imports from Morocco, Jordan, China, the US and the rest is produced indigenously.
On April 28, the Cabinet had approved a hike in the benchmark price (which is used to determine subsidy level) of DAP to USD 612/tonne from the current level of USD 580/tonne to insulate fertiliser firms from high global prices and maintain domestic prices at affordable rates to farmers.