price increase

India, which imports all of its potash requirements, may pay a higher price than last year for overseas purchases of the fertilizer to ensure supplies, two government officials said.

Buyers including Indian Potash Ltd. may offer a maximum $390 a metric ton for the year starting April 1 to sellers led by International Potash Co., 5.4 percent more than a year ago, the officials said. Ministers including Finance Minister Pranab Mukherjee met in New Delhi today to discuss the new price, they said.

Prices for agricultural nutrients such as potassium, nitrogen and phosphorus are rising, as expanding food demand and inclement weather put a strain on global supplies of wheat, corn and soybeans. In India, potash is mainly used to boost yields of rice, sugar cane, fruit and vegetables.

The Indian import price would be $10 lower than the rate agreed by Chinese buyers. OAO Uralkali?s trader Belarusian Potash Co. agreed to a six-month supply accord with China to deliver 600,000 tons of the crop nutrient at $400 a ton including freight, it said last month.

The Indian government sets the benchmark import price because it provides a subsidy based on the rate. India was the world?s biggest potash importer in 2009, according to Fertecon, a Tunbridge Wells, England-based fertilizer consultant. Should the importers pay more than $390, they would have to bear the difference or pass the extra cost to farmers, the officials said. The government officials didn?t want to be identified because the information is not public.

India may import 5.8 million to 6 million metric tons of potash in the year starting April 1, compared with a contracted 5.8 million tons a year earlier, P.S. Gahlaut, managing director of Indian Potash, the country?s biggest importer, said in a telephone interview today.

?Demand for potash normally goes down when prices rise, but I hope it stays,? said Gahlaut, whose company accounts for 60 percent of the nation?s overseas purchases of the soil nutrient. ?We always get a good price as we buy large volumes.?