Black market for fertilisers booming as prices soar

Indian farmers squeezed by a massive shortage of fertilisers are turning to the black market and paying exorbitant prices for supplies.

The shortfall has led to a thriving market where subsidised crop nutrients are sold illegally at prices much higher than levels set by the government. Shady agents have been busy fielding requests from farmers who call them in desperate need.

With a key planting season underway for millions households that depend on agriculture for a living, farmers say they don't have much of a choice. We either have to cut the use of fertilisers and risk lower production, or pay sky-high prices on the black market, said Dilip Patidar, a wheat and onion grower in Madhya Pradesh.

In the black market, a 45kg bag of di-ammonium phosphate (DAP) is selling for Rs 1,500, above the maximum retail price of Rs 1,200, Patidar said. A bag of urea costs as much as Rs 400 compared with the usual price of Rs 266.

He is waiting for his fertiliser stocks to arrive. "If I don't get adequate supplies on time my output will fall," he said.

Another farmer in Haryana is also facing fertiliser woes. Sukram Pal said he managed to sow wheat by using half the usual amount of DAP, but now needs urea, which is in short supply.

India is one of the worst affected by a worldwide fertiliser crisis. Prices of crop nutrients have soared as tight coal and natural gas supplies forced some fertiliser plants in Europe to close. China and Russia have also curbed exports to safeguard domestic supply. These hurdles will keep fertiliser prices elevated through the first half of 2022, according to Gro Intelligence.

India will be first to feel the pinch as its fertiliser demand tends to peak in the fourth to first quarter, according to Bloomberg Intelligence. The export curbs by China, one of India's top suppliers, have left it with few options for fertiliser supplies.

India imports up to a third of its fertilisers and is the world's biggest buyer of urea and DAP. The supply crunch could hurt production of winter crops.

India is boosting its own fertiliser production and working on long-term deals with suppliers to curb price increases, according to people familiar with the matter. Current subsidies to fertiliser firms are sufficient but if more is required, the government will grant it, they said.

The Centre has started making weekly allocation of fertilisers to districts based on demand to prevent hoarding, they said.