A crucial component of agriculture, the fertilizer industry has seen elevated application rates per unit of area in the recent years, catering to the growing population and demanding pressure on agriculture. Although the urea consumption has been growing at a CAGR of about 4.1%, there has been a drop in the contribution by allied sectors to the GDP, the causative agent being urbanization and a shift from the agricultural operations to service sectors. Comforted by the new fertilizer policy which introduces incentives on additional production of urea as well as the slack in global raw material prices, this sector has gained Year on year, but production has remained stagnant due to barricades on availability of raw materials. Relying on domestic production, imports have softened and this is reflected on prices of fertilizer stocks last year. Led by Coromandel International, the fertilizer manufacturing sector is crowded by many participants as illustrated below. It is interesting to note that although urea is manufactured domestically in larger quantities than Potash or phosphates, the CAGR of potash and phosphate fertilizers are higher than that of urea. This is due to the fall in global raw material prices.
MMTC is India’s largest importer of fertilizer. It serves as a promoter and distributor of fertilizers to other institutional customers. The fertilizer industry in India is mostly dominated by the private sector although a few public sector companies like FCI Aravali Gypsum and Minerals Ind. Ltd., Fertilizer Corporation of India and BVFC Ltd. To name a few do exist but with lower market shares.
Owing to the addition to global capacities, the recent fall in the prices of raw materials of fertilizers have led to heavy investments from China, Brazil, Russia and Canada in projects for expansion of fertilizer raw materials. Asia consumes more than half of the global nitrogen fertilizers but lacks in consumption of potash and phosphate fertilizers. India imports almost all of its potash and phosphate demand which is favorable to India since raw material prices have dropped but also puts an upward pressure on need for domestic production of these fertilizers. In the pursuit of supporting accessibility of Urea, heavy subsidies by the Government have led to an alarming disparity between domestic and international prices of Urea. In the past, there has been certain resistance to the industry in terms of soil health and sustainability. The continuous infusion of fertilizers and resorting to inorganic methods to restore nutrients in earth has led to questioning the viability of fertilizers in the future. Being the cheaper and more widely accessible fertilizer, farmers have overfed soils with Urea thus disturbing the NPK ratio of Indian soils increasing it to 8.2:3.2:1 in 2014 from 4:2:1 in 2010. This is a matter of concern and was responded by the Government taking steps to promote responsible usage of fertilizers by introducing a Soil Health Card which notifies recommendations of fertilizer proportion corresponding to crop category. Although this initiative meant an additional ache on budget allocations, it ensured sustainability of Indian soil health.
Although India imports 25% of its total consumption of Urea, its demand is met by domestic production unlike that of potash and phosphate. The new Government policies to revive complex fertilizers like NPK, removal of cap prices on Neem coated Urea, and promotion of recommended usage of fertilizers has spelt hope unlike the industry growing below budgeted rates as per the previous Five Year Plan (3.6% as against a budgeted 4%). Demand and supply mismatch, shrinking sowing area and an increasing demand for nutrient rich food has placed a responsibility on this industry to not only augment manufacture of fertilizers domestically but also maintain fertility of Indian Soils. With good Government support and initiatives to share technology through PPPs or alliances with foreign participants to channel inventories and to promote establishments of manufacturing units abroad, this industry can gather further momentum and revive its growth rates.
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What this report contains:
A detailed overview of the industry
Structure of the industry from both, domestic and international perspectives
Related industries that this industry has inter-dependencies with and their understanding
Detailed analysis of industry segments in terms of the value and depth of corresponding market
Analysis & insights about the elements and critical success factors of this industry using strategic models
A forecast on the state of this industry in 2020, predicting the growth and movement patterns for 2016 - 2020
Our professional analysis on the future of the industry based on strategic actions adopted by major industry participants
Quantitative estimates and forecasts of the growth prospects of the industry using revenue and financial forecasting models