India Seeks Leverage on Nutrient Pricing

October 12, 2012 10:21 AM

Potash exports to India and China are on hold. Potash rich Belarus is looking to thwart E.U. sanctions by filling China's potash dancecard by rail, snubbing Canada's Canpotex and the E.U. Meanwhile, India is struggling with a nutrient imbalance on the farm and diminishing government fertilizer subsidies, driving inputs pricing upward. The following is an excerpt from a Reuters interview with the head of one of India's biggest fertilizer makers, Indian Farmer's Fertiliser Co-operative (IFFCO).

"Once the crop-growing season wraps up in December in parts of India, buyers like IFFCO will have a better idea of how much [potash] they need from Canpotex Ltd and Belorussian Potash Company, the off-shore potash marketing agencies for miners in Canada and Russia/Belarus respectively', said U.S. Awasthi, managing director of IFFCO.

IFFCO buys nutrients, including potash, to make into fertilizer products to sell to Indian farmers. Fertiliser makers get an idea of demand once farmers can assess their soils after the harvest.

The weakening rupee and a cut in Indian government fertilizer subsidies have made potash more expensive for Indian farmers. Awasthi said he doesn't expect India to restore its potash subsidy levels.

Weak demand from India has contributed to a stockpile of potash among North American producers, which was one-third larger in September than the five-year average. A new Canpotex contract with India had been expected as early as August this year, with some now expecting a deal as late as the first quarter 2013." (Click here for the full Reuters story)

What is clear here is India's eye toward input pricing management. The government has since opted to impose a 50 rupee increase on the price of domestic Urea -- that's 0.94 cents in U.S. dollars. Given the weakness of the Indian rupee and the growing nutritional shortfall, tying up Canpotex's potash by holding out till the spring to book may give India the pricing leverage the government needs to supply potash to its growers at a price they can afford.


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