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LATEST NEWS UPDATES | If crop acreages are up, why are fertilizer sales falling? -R Sree Ram

If crop acreages are up, why are fertilizer sales falling? -R Sree Ram

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published Published on Sep 22, 2016   modified Modified on Sep 22, 2016
-Livemint.com

The trends are perplexing since crop acreages till last week rose by an impressive 3.7 million hectares from the year ago

The latest monthly bulletin from the ministry of chemicals and fertilizers has a curious table on Kharif season fertilizer sales till August. The data shows that except MoP (muriate of potash), sales of other major fertilizers fell from the year-ago period, deepening the mystery about agriculture inputs sales trends in the current season.

Till August or so far this summer crop season, urea sales are down 8.8%. DAP/MAP dropped 23%, complex fertilizers 13%. DAP is short for diammonium phosphate and MAP for monoammonium phosphate.

The trends are perplexing considering the fact that crop acreages till last week rose by an impressive 3.7 million hectares from the year ago. Acreages of paddy, a significant user of fertilizers, rose by about 1 million hectares.

What explains the conundrum? There are no straight answers yet. Analysts are sceptical. If one takes the data at face value, then trends indicate weak fertilizer off-take. It means the widely forecast recovery in fertilizer sales may not have materialized. Or perhaps the recovery is not as strong as anticipated. Urea sales in August are up just 3.9%, while complex fertilizer sales fell slightly. Fertilizer sales in the first four months of the current fiscal year were weak due to excess inventories and slow progress of the monsoon.

Further, the bulletin shows significantly higher availability of fertilizers, slow inventory liquidation and low headroom for sales push. (For convenience, companies place fertilizers ahead of consumption in the retail network—this is captured in the availability data. They are considered as sales only when purchased by farmers and end-users.) Urea’s availability in August was 54% greater than sales. DAP availability was 2.8 times the August sales. Complex fertilizers availability is more than double the sales.

Delayed sowing, long dry spell and floods in several parts of the country may have weighed on fertilizer sales or pushed them to September. If the current month’s data does not reflect this effect and sales do not recover, then companies’ earnings can see widespread cuts.

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Livemint.com, 22 September, 2016, http://www.livemint.com/Money/QECjllDkB94B18ZziWjA1J/If-crop-acreages-are-up-why-are-fertilizer-sales-falling.html


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