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Demand & Supply of fertilizer in India

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Information about Demand & Supply of fertilizer in India
Education

Published on January 14, 2009

Author: soumyashree85

Source: slideshare.net

Description

This is the current status quo of the indian fertilizer industry .
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Soumyashree Panigrahi ID No. ABM-08122 [email_address]

Seed..Its fate.. Demand & Supply Importance of Fertilizer Statistical analysis of fertilizer industry Production & consumption statistics. Actual state of distribution in India Highlights of 2005-06 Demand factors & supply constraints Consequence of unrealistic forecast Analysis of forecast Import scenario SWOT Analysis of Indian Fertilizer industry Conclusion Seed & fertilizer are the most vital inputs which can revitalize our agriculture.. M S Swaminathan in 1962

Seed..Its fate..

Demand & Supply

Importance of Fertilizer

Statistical analysis of fertilizer industry

Production & consumption statistics.

Actual state of distribution in India

Highlights of 2005-06

Demand factors & supply constraints

Consequence of unrealistic forecast

Analysis of forecast

Import scenario

SWOT Analysis of Indian Fertilizer industry

Conclusion

Seed & fertilizer are the most vital inputs which can revitalize our agriculture..

M S Swaminathan in 1962

When a seed is planted in soil, it grows upto a tree by absorbing nutrients & water from soil. When the soil is not capable of supplying the necessary nutrients then the plant cannot grow . That’s why we supplement the nutrient status of the soil by application of fertilizer . Fertilizer - Any material, organic/inorganic, natural/synthetic, which supplies one or more of the chemical elements required for the plant growth.

When a seed is planted in soil, it grows upto a tree by absorbing nutrients & water from soil.

When the soil is not capable of supplying the necessary nutrients then the plant cannot grow .

That’s why we supplement the nutrient status of the soil by application of fertilizer .

Fertilizer - Any material, organic/inorganic, natural/synthetic, which supplies one or more of the chemical elements required for the plant growth.

Demand- The effective desire backed by ability to buy a perticular good. Supply- The quantity available in the market in response to a demand. Both demand & supply regulate the market dynamics. Fertilizer demand is increasing day by day. Total production is expected to grow from 206.5 million tonnes in 2007/08 to 241 million tonnes in 2011/12. Fertilizer demand will increase from 197 million tonnes today to 216 million tonnes in 2011/12.

Demand- The effective desire backed by ability to buy a perticular good.

Supply- The quantity available in the market in response to a demand.

Both demand & supply regulate the market dynamics.

Fertilizer demand is increasing day by day.

Total production is expected to grow from 206.5 million tonnes in 2007/08 to 241 million tonnes in 2011/12. Fertilizer demand will increase from 197 million tonnes today to 216 million tonnes in 2011/12.

Fertilizer has been considered as a crucial input to Indian agriculture for improving productivity to meet the requirements of a growing population. Chemical fertilizer had played a vital role in India’s green revolution & consequent self reliance in food grain production. Indian fertilizer industry started in 1906 with SSP production facility at Ranipet,near Chennai with an annual capacity of 6000 mT.

Fertilizer has been considered as a crucial

input to Indian agriculture for improving

productivity to meet the requirements of a

growing population.

Chemical fertilizer had played a vital role in India’s green revolution & consequent self reliance in food grain production.

Indian fertilizer industry started in 1906 with SSP production facility at Ranipet,near Chennai with an annual capacity of 6000 mT.

Consumption of fertilizer Total Consumption (in 000 T) Per Ha Consumption North Zone Total Consumption (in 000 T) Per Ha Consumption Source- Ministry of Fertilizer, Govt. of India Year N P K NPK N P K NPK 1996-97 10301.8 2976.8 1029.6 14308.2 54.8 15.8 5.5 76.0 2001-02 11620.7 4804.1 1704.2 18128.9 61.3 25.3 9.0 95.6 Year N P K NPK N P K NPK 1996-97 3886.1 852.9 100.8 4839.9 93.7 20.6 2.4 116.6 2001-02 4231.9 1360.2 150.5 5742.6 100.5 32.3 3.7 136.3

Consumption of fertilizer

Total Consumption (in 000 T) Per Ha Consumption

North Zone

Total Consumption (in 000 T) Per Ha Consumption

Source- Ministry of Fertilizer, Govt. of India

Fertilizer Year Production Import Consumption Urea 1990-91 128.31 13.91 140.04 (in mT) 1995-96 158.2 37.81 179.09 2000-01 198.3 5.33 202.8 2002-03 189.2 ----- 192.23 Fertilizer Year Production Import Consumption DAP 1990-91 28.7 20.77 45.18 (in mT) 1995-96 26.47 15.14 34.51 2000-01 48.89 8.60 58.85 2002-03 57.76 3.44 72.80 Fertilizer Year Production Import Consumption MOP 1990-91 ----- 20.40 17.01 (In mT) 1995-96 ----- 21.91 13.92 2000-01 ----- 25.68 18.29 2002-03 ----- 23.47 22.50

Source- Ministry of Fertilizers, Govt. of India 2 types of fertilisers in India- 1. Controlled ( urea ) 2. Decontrolled ( MOP & DAP ) Year Season Fertiliser Stock Production Import Total Availability Requirement 2006-07 Kharif Urea 9.43 95.01 33.85 138.29 131.68 Rabi ---- 106.43 34.86 142.29 140.02 2006-07 Kharif DAP 7.30 24.70 12.22 40.26 36.29 2006-07 Kharif MOP 1.52 ---- 17.77 19.29 16.52

India’s rank in fertilizer production China (39.6 ) > USA (19.3) > India (16.1) > Brazil (7.6) > France (4.3) Production - marginal increase in N & P 2 O 5 production -Increase is respectively 0.9% & 3.2% over 2004-05 Consumption – Impressive growth in consumption - Total nutrient consumption is estimated to increase at 8.2% - Consumption of N, P 2 O 5 & K 2 O recorded a growth of 6.3%, 9.8% & 15.6% respectively. Impact of Budget of 2007-08 A Rs 60,000 crore debt relief package scheme for farmers An outlay of Rs 280,000 crore for agricultural credit Greater emphasis on irrigation projects Customs duty on phosphoric acid to be reduced from 7.5% to 5% Naphtha used in the fertiliser industry to be exempt from customs duty Dividend tax paid by parent company allowed to be set off against the same paid by its subsidiary

India’s rank in fertilizer production

China (39.6 ) > USA (19.3) > India (16.1) > Brazil (7.6) > France (4.3)

Production - marginal increase in N & P 2 O 5 production

-Increase is respectively 0.9% & 3.2% over 2004-05

Consumption – Impressive growth in consumption

- Total nutrient consumption is estimated to increase at 8.2%

- Consumption of N, P 2 O 5 & K 2 O recorded a growth of 6.3%, 9.8% & 15.6% respectively.

Impact of Budget of 2007-08

A Rs 60,000 crore debt relief package scheme for farmers

An outlay of Rs 280,000 crore for agricultural credit

Greater emphasis on irrigation projects

Customs duty on phosphoric acid to be reduced from 7.5% to 5%

Naphtha used in the fertiliser industry to be exempt from customs duty

Dividend tax paid by parent company allowed to be set off against the same paid by its subsidiary

Demand factor Price - Input price- Fertiliser other inputs Output price – Crop Price Non Price - weather Irrigation HYV Seeds Availability Credit availability Promotion & awareness Supply Constraints Production- Technical/Equipment problem Feedstock/raw material shortage Power shortage Market scarcity Labour shortage Stringent Govt. Policy Import- High International Price Low Exportable surplus

Demand factor

Price - Input price-

Fertiliser

other inputs

Output price –

Crop Price

Non Price - weather

Irrigation

HYV Seeds

Availability

Credit availability

Promotion & awareness

Supply Constraints

Production- Technical/Equipment problem

Feedstock/raw material shortage

Power shortage

Market scarcity

Labour shortage

Stringent Govt. Policy

Import-

High International Price

Low Exportable surplus

 

 

Glut - High inventory leading to - High inventory carrying cost - Liquidity crunch Deterioration of quality due to prolonged storage Scarcity – Lower import leading to - High International price - Additional burden on exchequer - Non-availability of fertilizer in time leads to lesser yield from farm

Glut - High inventory leading to

- High inventory carrying cost

- Liquidity crunch

Deterioration of quality due to prolonged storage

Scarcity – Lower import leading to

- High International price

- Additional burden on exchequer

- Non-availability of fertilizer in time leads to lesser yield from farm

Nitrogen P 2 O 5 K 2 O Year Demand Supply Surplus(+)/Deficit(-) Demand Supply Surplus(+)/Deficit(-) Demand 2006-07 13556 12507 -1049 5681 4253 -1428 2482 2007-08 14132 12728 -1404 6003 4387 -1616 2621 2008-09 14626 13403 -1223 6293 4538 -1755 2762 2009-10 15088 13422 -1666 6586 4693 -1893 2917 2010-11 15516 15146 -370 6870 4795 -2075 3075 2011-12 15941 15146 -795 7169 4795 -2374 3238

Nitrogen- 1. Total demand is expected to increase at 3.3% 2. Total supply is expected to increase at 3.9% 3. Total deficit will increase upto 2009-10 & then expected to reduce in 2010-11 & 2011-12 4. 14 Urea plants under expansion ( 11- Debottlenecking 3 – Expansion ) 5. Proposal for debottlenecking of 2 plants have been cleared & remaining are wanted till date

Nitrogen- 1. Total demand is expected to increase at 3.3%

2. Total supply is expected to increase at 3.9%

3. Total deficit will increase upto 2009-10 & then expected to reduce in 2010-11 & 2011-12

4. 14 Urea plants under expansion

( 11- Debottlenecking

3 – Expansion )

5. Proposal for debottlenecking of 2 plants have been cleared & remaining are wanted till date

Phosphate – 1. Total demand will increase at 4.8% 2. Total supply will increase at 2.4% 3. Total deficit to increase from 2006-07 up to 2011-12 Potash – Total demand will increase at 5.5%

Phosphate – 1. Total demand will increase at 4.8%

2. Total supply will increase at 2.4%

3. Total deficit to increase from 2006-07 up to 2011-12

Potash – Total demand will increase at 5.5%

What is being imported..?? 1. Phosphate – Raw materials & intermediates for production 2. Potash – Entire demand 3. Urea – Natural gas & LNG Value of Imported Urea Year Quantity (LmT) Cost in US D ( PmT) Value in INR ( Lakh US D) 2001-02 2.20 107.05 235.51 2002-03 ----- ----- ----- 2003-04 ----- ----- ----- 2004-05 6.41 237.88 1524.83 2005-06 7.31 258.56 1890.07 2006-07 13.25 155.09 2054.94

What is being imported..??

1. Phosphate – Raw materials & intermediates for production

2. Potash – Entire demand

3. Urea – Natural gas & LNG

Value of Imported Urea

Encouraging indigenous production Incentives to companies Capacity addition, expansion & setting up of new plants More investment friendly policy Compensating for the disadvantages to the industry vis-à-vis the international industry Encourage to invest abroad in the resource rich countries.

Encouraging indigenous production

Incentives to companies

Capacity addition, expansion & setting up of new plants

More investment friendly policy

Compensating for the disadvantages to the industry vis-à-vis the international industry

Encourage to invest abroad in the resource rich countries.

Public Sector Companies – NFL - Nangal, Panipat, Bhatinda, Vijaipur- Urea (Kisan Urea) FACT- Ambalumedu & Cochin- Urea & Complex Fert. RCF – Trombay & Thal- Urea (Ujjwala) & 20-20-20 (Sufala) MFL – manali – Ammonia, urea,Complex & Biofertiliser (Vijay) SAIL – Rourkela – CAN (Sona) NLC – Nayevelli- Urea (Neyeveli Urea) PPL – Paradeep – DAP, 10-26-26, 12-32-16 (kalyani) PPCL – Amjhor, Saladipuram & Dehradoon- SSP & Rock Phosphate (Soneganga khad) HFC – kamroop, Durgapur, Barauni, haldia- Urea (Moti) FCI – Sindri, Ranagundam, talcher & Gorakhpur- Urea (Swasthik) HCL – Khetrinagar- SSP (Jyoti)

Public Sector Companies –

NFL - Nangal, Panipat, Bhatinda, Vijaipur- Urea (Kisan Urea)

FACT- Ambalumedu & Cochin- Urea & Complex Fert.

RCF – Trombay & Thal- Urea (Ujjwala) & 20-20-20 (Sufala)

MFL – manali – Ammonia, urea,Complex & Biofertiliser (Vijay)

SAIL – Rourkela – CAN (Sona)

NLC – Nayevelli- Urea (Neyeveli Urea)

PPL – Paradeep – DAP, 10-26-26, 12-32-16 (kalyani)

PPCL – Amjhor, Saladipuram & Dehradoon- SSP & Rock Phosphate (Soneganga khad)

HFC – kamroop, Durgapur, Barauni, haldia- Urea (Moti)

FCI – Sindri, Ranagundam, talcher & Gorakhpur- Urea (Swasthik)

HCL – Khetrinagar- SSP (Jyoti)

Cooperative Fertiliser Companies- IFFCO- Kalol, Phulpur, Aonla ( Urea) & kandla ( NPK/DAP) KRIBHCO – Hajira(Surat) – Urea & Biofertilisers Other Private Companies – Oswal, TATA, Indogulf, chambal, Nagarjuna, Coromandal, Godavari, Duncan, Zuari, Sreeram etc.. DMCC- SSP

Cooperative Fertiliser Companies-

IFFCO- Kalol, Phulpur, Aonla ( Urea) & kandla ( NPK/DAP)

KRIBHCO – Hajira(Surat) – Urea & Biofertilisers

Other Private Companies –

Oswal, TATA, Indogulf, chambal, Nagarjuna, Coromandal, Godavari, Duncan, Zuari, Sreeram etc..

DMCC- SSP

Opportunity knocks only once.. Innovation is the ability to see change as an opportunity,not athreat Opportunity- Per capita fertliser consumption is low New joint ventures Deregularisation Fast growing population 2/3 population still depends on farming as a source of livelyhood Threats – Uncertainty prevailing over policy Late payment of commision Shortage of feedstock Biofertilisers

Opportunity knocks only once..

Innovation is the ability to see change as an opportunity,not athreat

Opportunity-

Per capita fertliser consumption is low

New joint ventures

Deregularisation

Fast growing population

2/3 population still depends on farming as a source of livelyhood

Threats –

Uncertainty prevailing over policy

Late payment of commision

Shortage of feedstock

Biofertilisers

Nitrogen deficit will increase & then decrease in 2010-11 & 2011-12. P2O5 & K2O demand will increase up to 2012. Global surplus of nitrogen is expected to increase due to commissioning of new projects . Supply & demand balance of P2O5 & K2O will remain tight. Realistic production & demand forecast is essential for macro-planning & decision making. Over-estimation leads to glut & under-estimation causes scarcity. So..We need to make realistic analysis of the fertiliser demand in our country..India..!!

Nitrogen deficit will increase & then decrease in 2010-11 & 2011-12.

P2O5 & K2O demand will increase up to 2012.

Global surplus of nitrogen is expected to increase due to commissioning of new projects .

Supply & demand balance of P2O5 & K2O will remain tight.

Realistic production & demand forecast is essential for macro-planning & decision making.

Over-estimation leads to glut & under-estimation causes scarcity.

So..We need to make realistic analysis of the fertiliser demand in our country..India..!!

www.indiawatch.com www.fert.nic.in www.searchindia.com www.thehindu.com www. indiabudget.nic.in/es2004-05/chapt2005/chap813.pdf www.hindu.com/2008/07/07/stories/2008070752240300.htm www. fert.nic.in/docs/policy_02062008.pdf www.jstor.org/stable/4361671

www.indiawatch.com

www.fert.nic.in

www.searchindia.com

www.thehindu.com

www. indiabudget.nic.in/es2004-05/chapt2005/chap813.pdf

www.hindu.com/2008/07/07/stories/2008070752240300.htm

www. fert.nic.in/docs/policy_02062008.pdf

www.jstor.org/stable/4361671

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