Fertiliser Volume Expected To Moderate Marginally In 2021-22: Credit Rating Agency ICRA

Primary fertiliser sales volume during first four months of FY22 registered 11 per cent decline

Primary fertiliser sales volume during first four months of FY22 registered 11 per cent decline compared to 4M FY21, mainly due to the base effect as during H1 FY21 fertiliser sales witnessed an upsurge owing to panic buying by farmers following Covid-19 pandemic led lockdown.

Rating agency ICRA said the overall rainfall which determines the sowing pattern has so far been normal in the current south-west monsoon season with a shortfall of only 2 per cent in line with the prediction of IMD.

During June, the rainfall was 10 per cent above the long period average (LPA) while it was 7 per cent below LPA in July.

As for the distribution of rainfall, it has been rather uneven across regions — the southern peninsula has witnessed higher rainfall than LPA while the east and the northeast has witnessed a shortfall of 13 per cent.

Sabyasachi Majumdar, Senior Vice President and Group Head at ICRA, said panic buying by farmers in light of Covid-19 pandemic lockdown had led to record sales in the kharif season of FY21 which petered off during the rest of the year as inventory de-stocking at farmer level led to lower offtake in H2 FY21.

The overall kharif sowing this year is down only 2 per cent as of the week ending August 6, posting a smart recovery after being down 22 per cent by end of June following the monsoon rains.

Moreover, reservoir levels across regions remain healthy which augurs well for sowing during the upcoming rabi season.

“While the overall fertiliser sales volume decline looks steep in the current kharif season, we expect the sales volume for full FY22 to be only marginally lower than FY21,” said Majumdar.

As for fertiliser production volumes, they have largely remained stable in 4M FY22 compared to 4M FY21 whereas imports have declined by 16 per cent.

The combined (production and import) volumes have declined by only 6 per cent in 4M FY22 whereas the retail sales have declined by 11 per cent, indicating availability of fertiliser inventory with fertiliser companies.

However, with limited availability of DAP in international markets and steep rise in import prices, availability for the upcoming rabi season will remain a key monitorable as the situation may further exacerbate with China banning fertiliser exports.

Author: desi123

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