India Takes Urgent Measures To Address Urea Supply Shortage

New Delhi, Aug 18 (KNN) India has initiated emergency measures to address a critical shortage in urea supply as heightened demand during the ongoing kharif sowing season has significantly strained domestic fertiliser stocks. 

The country's agricultural sector is experiencing unprecedented pressure due to increased cultivation activities, prompting immediate government intervention to prevent potential disruptions to crop production.

National Fertilisers Limited (NFL) has issued a tender for the import of 2 million tonnes of urea, marking the latest in a series of urgent procurement efforts. 

This action follows a similar import initiative by Indian Potash Limited (IPL) and coincides with reports indicating that China has relaxed its export restrictions on the essential agricultural input.

The severity of the situation is reflected in the dramatic decline of India's urea reserves. As of August 1, 2024, the country's urea stock stood at 37.19 lakh tonnes, representing a substantial decrease from 86.43 lakh tonnes recorded during the same period last year. 

This depletion has occurred alongside a 12 percent increase in urea sales during the April-June quarter, creating significant supply-demand imbalances.

The surge in fertiliser demand stems primarily from expanded cultivation areas for paddy and maize crops, facilitated by favorable monsoon conditions across key agricultural regions. 

Union Agriculture Minister Shivraj Singh Chouhan has acknowledged the urgency of the situation, directing state agriculture ministers to ensure adequate and timely urea distribution while implementing measures to prevent potential misuse of subsidised fertilisers.

To support increased import activities and mitigate financial pressures on the fertiliser sector, the central government has substantially enhanced subsidy disbursements to fertiliser companies. 

During the first quarter of the current fiscal year, subsidy payments increased by 51.5 percent to Rs 31,983.6 crore, demonstrating the administration's commitment to maintaining agricultural input availability.

The NFL tender, which seeks to import 1 million tonnes each through India's eastern and western coastal ports, represents a strategic approach to augmenting domestic supply chains. 

The tender, issued on August 15, is expected to benefit from China's reported agreement to export 3 lakh tonnes of urea to India, potentially contributing to price stabilisation in global markets.

Global urea prices have experienced significant volatility, rising from approximately USD 425 per tonne in May to USD 530 per tonne in recent weeks. 

Industry analysts suggest that China's decision to ease export restrictions could help moderate these price increases, providing relief to importing nations facing supply constraints.

The current shortage has been exacerbated by multiple factors affecting both domestic production and international procurement. 

While urea imports increased by 23.7 percent in June, reduced overseas purchases in preceding months combined with a 10 percent decline in domestic production during the April-June period have intensified supply pressures.

The NFL tender results, scheduled to be announced on September 2, are anticipated to provide crucial insights into global supply-demand dynamics and may influence future procurement strategies for India's fertiliser sector. 

The outcome will likely serve as an indicator of the effectiveness of current government interventions in addressing the ongoing supply crisis.

(KNN Bureau)