New Delhi: In a massive respite for the government, quotes received for urea procurement have plunged by over 50% compared to the quotes received two months ago.
For the government, this development couldn’t come at a better time, as cheap fertilizer imports are expected to come in time for the critical Rabi sowing season. After weeks of inflated commodity and oil price increases due to the Middle Eastern turmoil, this development offers a consolatory win to the government for both local food security and the national exchequer.
For the last import tender by the National Fertilizers Limited (NFL), the central government has seen commercial bids fall below $450 per metric tonne, even lower than the prices before the Middle East turmoil started.
Capitalizing on this, the government is aiming to order well beyond the 17 lakh tonnes of urea it aimed to buy to build a buffer as it looks to mitigate challenges with changing urea prices.
Global urea prices have been falling as China re-enters the market after limiting exports to protect its domestic agricultural sector. Besides this, international chemical companies have built brand new, highly automated urea fertilizer factories across the Gulf and North Africa, boosting supplies and lowering prices.
While this does not impact the retail prices Indian farmers pay for urea, the government will have to pay far less than it anticipated as urea remains heavily subsidized in India. With the money saved, the government can save crores of rupees in subsidy spending to redirect it to other sectors of the economy.
