Fiscal difficulties have the government of India subsidizing fertilizer to moderate the price of NPK and to help farmers acquire nutrient in the face of a falling national currency. But the subsidy program is creating an imbalance that has NPK in India turned on it's head.
In the U.S., current Urea pricing lies at 28 cents per pound. That compares with India's imposed Maximum Retail Price of USD$99.00 per ton -- that's five cents per pound of Urea. This is where the imbalance shows up. Prices for DAP in the U.S. are running around 32 cents per pound while DAP in India is imposed at 19 cents/lb.
At the same time, Potash in the U.S. falls in currently at 29 cents/lb and MOP in India prices around 11cents/lb.
NPK in the U.S. registers at 28 cents N, 32 cents P and 29 cents K respectively. NPK in India is at five cents N, 19 cents P and 11 cents K. Part of the imbalance comes from India's efforts to utilize domestic nutrient, and while India imports 100% of its annual K, Urea production is booming. India's will to encourage domestic Urea production has resulted in a national policy that favors an unbalanced nutrient profile.
The imbalance is even more glaring when comparing the preferred Nitrogen sources of the two countries. In the U.S., most growers prefer Nitrogen in the form of Anhydrous ammonia which currently sits at 43 cents/lb. Granted, Anhydrous pricing is high in the States right now, but imagine what would happen if suddenly Anhydrous were $99.00/ton and P&K were priced at $300.00/ton. What would happen to yields in the U.S. if for several seasons, growers applied only Anhydrous -- as many Indian growers now do with Urea.
Couple this with a flailing national economy, a lackluster monsoon season and a falling national currency and it is not so difficult to envision how such an imbalance could transfer from government spreadsheets to the soil.
India has made efforts recently to forge its own K sources in Canada -- first by purchasing a 20% stake in Karnalyte Resources, then by shoring up a 20-year deal with Encanto for Potash delivered at 8% below market value (click here to read). In addition, domestic Phosphate processing is on the increase and that, along with fair access to natural gas resources, may help to mitigate the imbalance at a price growers in India can afford.