Rakesh Kapur POLICY SEMINAR Fertilizer Availability and Affordability: Implications for agricultural productivity and food security MAY 4, 2022 - 9:30 TO 11:30AM EDT

1. Indian Fertilizer
Scenario in Volatile
Market
Rakesh Kapur
Jt. Managing Director
rkapur@iffco.in
New Delhi
May 04, 2022

2. India – Global Trade
India – A large Global Importer of Fertilizers and its Raw Material/
Intermediates ~ 36 Million MTPA valuing more than US$ 10 Billion.
2
3
10
8
4
6
5
14%
20%
25%
56%
31%
6%
0%
10%
20%
30%
40%
50%
60%
0
2
4
6
8
10
12
Ammonia Urea Rock Phosphate Phos. Acid DAP MOP
India’s Share in Global Trade in 2020 (Million MT),
% of Total World Export

3. Fertiliser and Agriculture in India
 India Fertilizers consumption ~ 62 Million
MTPA, playing pivotal role in ensuring Food
Security for the growing population.
 Urea accounts for more than 50% of total
consumption of Fertilisers.
 Fertilizer Demand projected to grow @
CAGR of 2% per annum.
 Government of India (GOI) offers Minimum
Support Price (MSP) on crops; Supports
Farmers by compensating their input cost
on normative basis.
3
34
9
2
11
6
Urea DAP MOP NP/NPK SSP
Annual Fertilizer Consumption,
2021-22*P (Million MT)
316
331
FOODGRAIN
PRODUCTION
HORTICULTURE
PRODUCTION
2021-22 *E, (Million MT)
*P = Provisional
*E = Estimated

4. Fertiliser Situation in India
Fertiliser Production Capacity ~ 55.9 million
MT
Urea Imports in the range @ 25-30%.
For Urea manufacturing ~ 65% requirement
met by Import of RLNG (Natural Gas).
Heavy dependence on Imports for Raw
Material of P&K fertilizers.
100% MOP imported
4
24.00 24.46 24.60 25.07
7.56 9.12 9.83 8.80
31.72 33.57 35.10 33.28
2018-19 2019-20 2020-21 2021-22
Production Imports Sales
3.90 4.55 3.77 4.22
6.92 5.44 5.81
5.69
9.50 10.28 10.50
8.45
2018-19 2019-20 2020-21 2021-22
Production Imports Sales
Urea
(million MT)
4.21
3.67
4.23
2.46
3.18 2.84
3.30
2.46
2018-19 2019-20 2020-21 2021-22
Imports Sales
DAP
(million MT)
MOP
(million MT)

5. Fertilizer Situation in India (MMT)
5
Product Year Production Imports Total Sales
Urea
2018-19 24.00 7.56 31.56 31.72
2019-20 24.46 9.12 33.58 33.57
2020-21 24.60 9.83 34.43 35.10
2021-22 25.07 8.80 33.87 33.28
Product Year Production Imports Total Sales
DAP
2018-19 3.90 6.92 10.82 9.50
2019-20 4.55 5.44 9.99 10.28
2020-21 3.77 5.81 9.59 10.50
2021-22 4.22 5.69 9.91 8.45
Product Year Production Imports Total Sales
NP /NPK
2018-19 9.51 0.72 10.23 9.62
2019-20 9.33 0.86 10.19 10.43
2020-21 10.05 1.74 11.79 12.18
2021-22 8.33 1.40 9.73 10.82

6. Urea Pricing for Farmer
Govt. Policy on
Urea - Fixed Retail
Price and Open
Subsidy.
Low MRP causes
higher Urea
consumption.
6
Urea Consumption Vs Price in India
0
5
10
15
20
25
30
35
40
0
1000
2000
3000
4000
5000
6000
7000
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
Axis Title
Urea
Consumption
(million
MT)
Urea
Price
(₹/MT)
Urea Price (₹/MT)
Urea Consumption (million MT)

7. P&K Fertiliser Pricing for Farmer
DAP Consumption Vs Price in India
7
Policy on P&K fertilizers -
Fixed Subsidy and Floating
Market Driven Retail Price.
At present 25 grades of P&K
fertilizers are covered.
P&K fertilizer consumption
gets affected on account of
high Import price/farmgate
price.
Urea to DAP farmgate price
ratio at 1:5
Demand destruction due to higher prices?
0.00
2.00
4.00
6.00
8.00
10.00
12.00
0
5000
10000
15000
20000
25000
30000
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
DAP
Consumption
(million
MT)
DAP
Price
(₹/MT)
DAP Price (₹/MT)
DAP Consumption (million MT)

8. International Price Trend – Last one
year
356
656
225
405
795
124
229
950
1,124
852
946
1,530
284
416
Granular Urea
(FOB ME Non
US Net)
DAP (CFR from
US Gulf)
MOP (FOB
Vancouver)
Ammonia (CFR
India)
Phos Acid CFR
India)
Rock
Phosphate (cfr
India)
Sulphur (CFR
India)
Trend in International Prices in last one year, USD/MT
Mar-21 Mar-22
8
167%
71%
92%
133%
280%
130%
82%
% increase
• Rising price trend in the fertiliser and raw material prices.

9. Covid
0
200
400
600
800
1,000
1,200
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2
Trend of International Price,
CFR India (USD/MT)
Sulphur DAP Ammonia MOP Prilled Urea
Import Price for India
Price Volatility of P&K fertilizers-
Impact on farm gate prices.
Fertilizer Prices soared in mid-2021
due to Strong Demand from key Crop
Growing regions, High Input Costs
and Lower Exports from China.
Fertilizer Prices were flat during initial
Covid period; Favourable for increase
in acreage and food grain production.
9

10. Increased Subsidy on Fertilisers
 GOI intervened to avoid the increase of farmgate
prices and raised the fertilizer subsidy on fertilisers.
 Fertiliser Subsidy raised by GOI in 2021-22:
 P&K subsidy by 210% to avoid demand
destruction; thus ensuring Food grain production.
 Urea subsidy by 29%, hence Farmers continued to
remain insulated from rise in International Prices
due to price control on Urea.
 Fertiliser Subsidy budget in 2022-23 is expected to go
up for P&K Fertilisers by USD 11.1 billion and Urea
by USD 7.5 billion.
10
Total Subsidy on Urea by GOI (USD Billion)
Particulars 2019-20 2020-21
2021-22
*P
2022-23
Budget Estimate 6.6 6.3 7.8 8.3
Actual Allocation 7.2 11.9 10.0 15.8@
increase (in USD
billion)
0.6 5.6 2.3 7.5
% increase 9% 89% 29% 90%
Total Subsidy on P&K by GOI (USD Billion)
Particulars 2019-20 2020-21
2021-22
*P
2022-23
Budget Estimate 3.3 3.1 2.7 5.5
Actual Allocation 3.5 4.9 8.5 16.6@
increase (in USD
billion)
0.2 1.8 5.7 11.1
% increase 6% 59% 210% 200%
*P = Provisional
*E = Estimated
@ Projected Subsidy amount

11. Sustainability of Fertilizer Budgetary Support ?
9.3 9.2 9.9 9.4
10.5
13.9
8.8
9.3 10.7
16.9
18.5
32.5
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23*E
Fertilizer Subsidy Allocation by GOI
(US$ Billion)
Budget Estimtae Actual allocation
11
Fertilizer Subsidy bill of
GOI rose from US $ 10.5
Billion to US $ 18.5 Billion
(76% increase) in 2021-22.
Fertilizer Subsidy Budget
for 2022-23 already
increased to USD 22
Billion. It may touch US$
32.5 Billion in 2022-23.
USD
7.5 B
USD
8.5 B
USD
22 B
*USDINR = 75.8071

12. GOI Budget- Agriculture & Fertilizer Subsidies
12
2.7% 2.7%
4.1%
4.4%
2020-21 2021-22
Fertiliser Subsidy Budget (% of Overall
GOI Revenue Budget)
Budget Estimate Actual Allocation
31.5%
34.9%
48.7% 48.7%
2020-21 2021-22
Fertiliser Subsidy Budget (% of Total
Agriculture Budget)
Budget Estimate Actual Allocation
Particulars Type 2020-21 2021-22 2022-23
Fertiliser Subsidy Budget (₹ Billion)
Budget Estimate Revenue 713 795 1,052
Actual Allocation Revenue 1,279 1,401 2,460*P
Overall Budget (₹ Billion)
Budget Estimate Revenue 26,301 29,290 31,947
Actual Allocation Revenue 30,835 31,673
Particulars Type 2020-21 2021-22 2022-23
Fertiliser Subsidy Budget (₹ Billion)
Budget Estimate Revenue 713 795 1,052
Actual Allocation Revenue 1,279 1,401 2,460*P
Total Agriculture Budget (₹ Billion)
Budget Estimate Revenue 2,261 2,278 2,567
Actual Allocation Revenue 2,623 2,878
Note: 1) Above is addition of Fertiliser subsidy budget and Agriculture & Allied Activities
Budget.
2) Food Subsidy budget has not been included in Total Agriculture Budget.
*P = Projected

13. Russia-Ukraine Conflict 2022
Russia Ukraine war began on February 24, 2022.
Closure of Odessa /Yuzhny ports impacted the
supplies from Black Sea.
Shortages in availability of vessels.
If prohibitive sanctions imposed on Russia for
longer period, it may cut off 3 million MT
Ammonia from global trade.
Rise in crude prices to impact the freight costs and
consequently, the fertiliser prices.
Fall out of the war in Ukraine has not just pushed up Oil
and Commodity Prices BUT severely hit Global Supply
Chains.
13
671
786
894 884
946
1,021
940 958
781 613
906 949
Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22
Impact on Ammonia and Urea
Price CFR India, US$/MT
Ammonia CFR Prilled Urea Bulk CFR
Rising Prices

14. Russia-Ukraine Conflict 2022 – Impact
on Fertiliser Trades
 Russia – amongst World’s largest fertiliser
exporters @range 10-30%
 Disruption has cut-off the Russian supply from
Global Trade.
 Rise in crude prices impacting the freight cost
and consequently, the fertiliser prices.
 Crude Oil price rise posing further thrust on
fertilizer commodities and Natural Gas Cost.
 Supply shock : Fertilizer Prices rising
exponentially globally.
 India imports approximately 0.35 million MT
Ammonia and 1.2 million MT Urea from
Russia.
Fertiliser
Global
Trade in
2020
Russia Export
& (%) of
Global Trade
Ammonia 18 4 (23%)
Urea 52 7 (14%)
DAP/ MAP 32 3.5 (11%)
NP/NPK 19 6 (31%)
MOP 58 12 (21%)
*Quantity in Million MT
Source : IFA

15. Impact of Conflict on Fertiliser Situation
in India
15
22 15
63
10
23
5
62
39
33
23
5
1
39
38
11
12
69
7
10
11
3
West Asia/ ME
region (%)
East Asia (%) Africa(%) Russia/ Ukraine (%) North America/
Europe (%)
India’s Fertiliser Imports from various Countries
MOP NP/NPK DAP Urea Ammonia
Primary source is Middle
East region /Africa
/South East Asia region
@ 66% of total imports
Sanctions on Russia may not
immediately impact the fertiliser
availability.

16. Fertilizer Imports to India from China
Commodity 2020-21
(Million MT)
2021-22
(Million MT)
Urea 3.0 2.31
DAP 1.55 2.0
NP 20:20:0:13 0.58 -
16

17. 9.50
10.28 10.50
8.45
9.62
10.43
12.18
10.82
3.18 2.84
3.30
2.46
2018-19 2019-20 2020-21 2021-22*E
Sale of P&K Fertilisers in India
(in Million MT)
DAP NP/NPK MOP
Impact on Fertiliser Situation in India
Increase in international prices but MRP was not allowed
to be increased
Subsidy increase not commensurate to the loss incurred.
Decline in Sales of P&K fertiliser, due to reduced
Availability in 2021-22.
Fertilizer Availability is not a significant threat for
upcoming Kharif season 2022. However, Price increase
may reduce Import demand and affect P&K consumption.
Imports supplies from other regions to partly replace the
Russia/Belarus shortfall
Prolonged Disruption in Global Supplies and Higher Prices
may affect the next Rabi Season 2022-23.
Increased Exchange Rate Volatility resulting in Higher
Landed Cost of Fertilizers.
17
19% decline
11.2% decline
25.6% decline

18. Government Efforts on Ensuring
Supplies
 Aggregation of Demand of Urea /DAP/NPK/MOP, as projected by the States before
start of the Kharif (Apr-Sep) and Rabi (Oct-Mar) Cropping Seasons.
 Reviewing Company wise Production/Import/Supply Plan every week.
 Monthly District -wise Fertilizer Movement Plan.
 Close Monitoring of Production /Imports /Dispatches /Inventory.
 Ensuring adequate Railway Rakes for product movement from the Plants/ Ports.
 Expediting Subsidy Payment to sellers on Sale of Fertilizers to Farmers through POS
machines.
 Holding Government to Government level consultations with Supplying countries to
ensure adequate supplies.
18

19. Strategy to Reduce Dependence on
Imports
19
Cost of Indigenous Urea Vs imported Urea
*Additional Outgo of ₹ 1500 billion to
foreign suppliers on Urea Imports.
*Av Imported Urea Price was much
higher at Rs 45000 PMT in 2021-22.
• Global and Regional Fertilizer Markets
to readjust to alternate Supply sources. Tighter
Supplies -Availability to be a constraint in the
longer run.
• Fresh Urea Capacities being added. Addition of
around 04 Million MT domestic Urea
production, thereby reducing 50% of Urea
Imports.
• In spite of Higher Fixed Costs of new Urea
Plants and substantial increase in LNG prices,
the Cost of Production of Domestic Urea
continues to be lower than the landed cost of
Imported Urea.
• Imports from other regions to partly replace
the Russia/Belarus shortfall. Natural K from
Molasses being pushed as a possible
substitute for Potash.

20. Other Strategies to Mitigate the
Effect of Higher Prices
 Natural Gas price increase to be absorbed in Subsidy Budget.
 Sanctions may lead to decline of Stock to Use ratio globally.
Rebuilding inventories may cause higher prices.
 Promoting Balanced use of fertilizers. To aggressively reduce
the per acre usage of fertilizers.
 Thrust on Micronutrient rich Specialty Fertilizer segment.
 Hike in Minimum Support Price (MSP) to incentivize Farmers
during this period of volatility.
 GOI is aiming to double the Wheat Exports (Target ~10 Million
MT) to ensure better returns to Farmers.
20

21. Other Measures to Reduce Fertilizer
Dependence
 Extension efforts for shifting to alternate
Cropping patterns that require less
conventional fertilizers and water.
 Soil Health Cards to encourage Balanced
use of Chemical Fertilizers.
 Encouraging use of Organic/ Bio-
Fertilizers/ Green Manuring to improve
Soil health and reduce fertilizer
consumption. Increased support to
Organic Farming.
 Fertilizing below the recommended rate
as a valid temporary strategy when the
fertilizer/grain price ratio is higher than
usual.
IFFCO has launched, Nano-Urea
(Liquid) Fertilizer – A promising
innovative alternative to meet the
Urea demand and reduce imports.
Nano DAP is also to be launched
shortly.

22. Thank You
22