Urea Prices Skyrocket to Nearly Double Amid West Asia Conflict Disruptions
Government-authorised fertiliser importing agency India Potash Ltd (IPL) has received offers to supply urea in the range of $935 to $959 per tonne. This represents almost double the rate observed just two months ago, with industry experts pointing to the ongoing West Asia conflict as a primary driver behind this sharp increase in prices for the crucial soil nutrient.
Comparative Tender Analysis and Supply Offers
In a stark contrast, the previous urea tender issued by Rashtriya Chemicals and Fertilisers saw bids in the significantly lower range of $508 to $512 per tonne. On the current tender floated by IPL, which aims to secure 25 lakh tonnes of urea by June 15, officials have confirmed that the importing agency will submit the quoted high prices to the government for a final decision. Notably, over two dozen firms have submitted offers to supply around 60 lakh tonnes against the IPL bid, but the prices quoted by these companies are far higher than historical norms.
Government Response and Digital Initiatives
Meanwhile, amid the ongoing supply disruption and surge in global prices of both urea and DAP (Diammonium Phosphate), the government is actively exploring measures to curb excessive use of these soil nutrients. One key proposal involves launching a mobile application that farmers can use to place their total fertiliser requirements in advance. This app would allow farmers to obtain fertiliser bags by completing biometric authentication and would also alert them when their purchases approach a set limit, promoting more judicious usage.
Detailed discussions on these measures were held at a meeting chaired by Cabinet Secretary T V Somanathan on Wednesday. The meeting focused on establishing a system to promote rational use of fertilisers, including linking distribution to a farmers database and raising awareness for balanced and scientific application. Officials from various departments, including fertiliser, agriculture, financial services, expenditure, and legal affairs, participated in these deliberations.
Stock Levels and Subsidy Implications
The government has maintained that there is adequate fertiliser stock for the upcoming Kharif sowing season, reportedly 15% more than last year's levels. It expects to have comfortable stocks before the peak Kharif demand in June. However, this situation is significant as increasing costs for raw materials and finished products are estimated to push subsidies beyond Rs 2 lakh crore. This figure is nearly 20% more than what the government had initially estimated for the fiscal year 2026-27.
People familiar with the government's proposals indicated that discussions are ongoing regarding how to utilize data from over 85 lakh unique farmer IDs linked to land records under the digital agriculture mission. This data would be used to better ascertain and manage fertiliser usage patterns across the country.
Global Price Trends and Import Dependencies
Trade sources report that global urea prices have increased by 35% to $726 per tonne, while DAP prices have risen by 15% to $654 per tonne since the beginning of the West Asia conflict. India relies on imports for nearly 25% of its domestic urea requirements. Annually, the country imports about 35-40% of all its fertilisers, with Gulf countries accounting for 40% of these imports. The closure of the Strait of Hormuz has severely impacted supplies, including LNG supplies used as a major feedstock for urea manufacturing, exacerbating the price surge and supply challenges.
