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India pushes multi-year deals to secure supplies of fertilisers
The measures are also aimed at hedging against price spirals and volatility, as global fertilizer rates soared to multi-year highs on the back of the Ukraine war. Lingering supply-side constraints due to the pandemic have worsened availability.
Indian firms are making investments in several mineral-rich nations and the country is pushing long-term deals with suppliers to secure fertilizer imports critical for food security, chemicals and fertilisers minister Mansukh Mandaviya said on Saturday.
The measures are also aimed at hedging against price spirals and volatility, as global fertilizer rates soared to multi-year highs on the back of the Ukraine war. Lingering supply-side constraints due to the pandemic have worsened availability.
The Ukraine war, costlier fertilisers and drought in Europe, China and the US have aggravated a global food crisis, which will “drive millions more into extreme poverty”, the World Bank said in its food security update on August 15.
“These measures by India will help make the country atmanirbhar (self-reliant) in fertilisers. The goals are to diversify sources of supply, have long-term contracts and get price discounts,” Mandaviya said at a briefing.
Indian firms are clinching deals with fertilizer and mining companies abroad with the help of government-to-government consultations. On August 25, the minister was in Saudia Arabia to chaperon bilateral pacts with several Indian firms and cooperatives with the Saudi Arabian Mining Company (Ma’aden).
The deals will ensure 2.5 million tonne of fertilizer supply through a three-year contract. The pacts also included one with the state-owned Indian Potash Company for supply of phosphate products. Another key deal was with Gujarat State Fertilisers and Chemicals for supply of ammonia and one each with Krishak Bharati Cooperative Company and Coromandel International for supply of phosphate products and ammonia.
India relies on imports to meet a third of its annual domestic demand of crop nutrients and gives them at a discount to farmers. The fertilizer subsidy bill is expected to touch a record ₹2.25 lakh crore this year due to higher global prices.
The country is entering into agreements or holding negotiations to buy stakes and set up joint ventures with firms in key mineral rich nations, Mandaviya said. These include partnerships with firms in Senegal for phosphoric acid, a key fertilizer ingredient and Saudi Arabia for DAP. Similar efforts to form joint ventures in Africa and Canada are on. The country has also signed a three-year agreement with Phosagro, a Russian firm, for 500,000 tonnes of DAP.
