Battling fiscal deficit, India to cut fertilizer subsidy for FY14
The state-run fertilizer company official said the government wants companies to lower retail prices of potash and phosphate, cushioning the impact of lower subsidies.
For the current fiscal year, India slashed subsidies for DAP by 27.4 percent from the previous year, while subsidies for MoP were cut by 10 percent. This forced fertilizer companies to raise retail prices, angering farmers, who cut consumption.
"Higher fertilizer prices and drought in some areas cut consumption this year. Consumption is unlikely to revive next year, if the government decides to cut subsidies further," said the fertilizer company official.
Weak fertilizer demand can hit the profitability of Indian firms such as Rashtriya Chemicals and Fertilizers, Tata Chemicals, National Fertilizers, GSFC , Coromandel International and Chambal Fertilizers and Chemicals.
It can also reduce India's DAP and MoP imports.
Potash Corp, Mosaic Co, Agrium Inc , Uralkali, Arab Potash Co, ICL Israel Chemicals and Germany's K+S AG are among the major potash suppliers to India.
Moroccan phosphate producer Office Cherifien des Phosphates (OCP), PhosChem and Russian fertilizer group Phosagro are key DAP supplier to India. ($1 = 53.2850 Indian rupees)