india introduces superphosphate subsidy

New concession policy for single super phosphate planned

To be input-based; likely to be finalised in a week

Subsidy routers

Policy aims to bail fertiliser sector out of rising raw material costs.

Considered base price slightly over Rs 1,300/tonne.

Current year SSP production likely to miss last year’s mark.

Phalguna Jandhyala

New Delhi, Nov. 21 The Department of Fertilisers (DoF) is looking to introduce an input-based concession policy for single super phosphate (SSP) soon, to help bail the industry out of the rising raw material costs. The base price that the department is considering, based on the cost of raw materials, is slightly over Rs 1,300 per tonne.

Currently, the DoF gives an ad-hoc concession of Rs 1,125 per tonne of SSP, which also includes a freight charge of Rs 150 that was introduced in April this year.

“The new policy is likely to be finalised by the department in a week. The subsidy to be paid by the Government will be worked out on principle of escalation and de-escalation of the raw material costs and there would be a review every month to see if there needs to be a change in the base price,� a senior official in the Department of Fertilisers told Business Line.
Relief base

The official added that since the cost of the two main raw materials in SPP — sulphur and rock phosphate — was increasing every month, manufacturers were cutting down on production, and the new policy is expected to provide some interim relief.

Domestic SSP manufacturers for a long time were pressing for concessions to be given to them on the same lines as what the di-ammonium phosphate (DAP) and muriate of potash (MOP) manufacturers get.

“In all probability the subsidy will be provided by the Government from November to March and is likely to involve an additional subsidy burden of Rs 27 crore,� the official said.

As per estimates, the domestic SSP industry has a production capacity of close to 70 lakh tonnes (lt) but only around 28.07 lt was produced in 2006-07.

This year up to August, 10.5 lt was manufactured and for the full year the total production is likely to miss even last year’s mark.
Has plant nutrients

SSP, which is commonly known as the poor man’s DAP, is the only fertiliser where the retail price is determined by the State Governments. In the case of urea, DAP and MOP, the retail price is determined by the Central Government.

The Government is keen on promoting SSP as it is not only a phosphatic fertiliser but also contains other plant nutrients like sulphur and calcium which enrich the soil. Currently, the average selling price of SSP is around Rs 3,800 per tonne whereas that of DAP is Rs 9,350 per tonne.

“SSP is a useful fertiliser for pulses and oilseeds especially in dryland areas. So the new policy that the DoF is finalising is expected to provide interim relief to the 60-70 SSP manufacturers in the country,� an official in the Fertiliser Association of India said.

He added that if the Government introduces a regional price structure for SSP it would help overcome the problem of disparity.

http://www.thehindubusinessline.com/2007/11/22/stories/2007112251631000.htm