Primary fertilizer sales volume during the first four months of FY22 registered an 11 percent decline
Primary fertilizer sales volume during the first four months of FY22 registered an 11 percent decline compared to 4M FY21, primarily due to the base effect as fertilizer sales increased during the first half of FY21 due to panic buying from farmers after the Covid-19 pandemic-induced lockdown.
Rating agency ICRA said the overall rainfall that determines the seeding pattern has so far been normal in the current southwest monsoon season with a deficit of just 2 percent in line with IMD’s forecast.
In June, rainfall fell 10 percent above the long-term average (LPA), while in July it was 7 percent below the LPA.
The distribution of rainfall is rather uneven across regions – the southern peninsula has seen more rainfall than LPA, while the east and northeast have a 13 percent deficit.
Sabyasachi Majumdar, Senior Vice President and Group Head at ICRA, said panic buying by farmers in light of the Covid-19 pandemic lockdown had led to record sales in the Kharif season of FY21, which dwindled into the rest of the year as a result Farmer-level destocking led to a lower decline in H2 FY21.
The total amount of kharif to be sown this year fell just 2 percent in the week ending Aug. 6, making a smart recovery after falling 22 percent in late June due to the monsoon rains.
In addition, reservoir levels in all regions remain healthy, which bodes well for seeding during the coming rabi season.
“While the overall decline in fertilizer sales volume looks steep in the current kharif season, we expect sales volume for the full FY22 to be only marginally lower than in FY21,” said Majumdar.
Fertilizer production volumes have remained broadly stable in 4M FY22 compared to 4M FY21, while imports are down 16 percent.
Combined volumes (production and imports) fell just 6 percent in 4M FY22, while retail sales fell 11 percent, indicating the availability of fertilizer stocks at fertilizer companies.
However, with the limited availability of DAP in international markets and the sharp rise in import prices, availability for the coming rabi season will remain a key focus as the situation may worsen as China bans fertilizer exports.
