India intends to safeguard fertiliser supply and hedge against price increases by increasing its presence in mineral-rich nations via investments and multi-year import agreements, said Mansukh Mandaviya, India’s fertiliser minister, on Wednesday.

Prices for important agricultural nutrients such as urea, potash, and di-ammonium phosphate (DAP) have reached all-time highs as a result of sanctions on major suppliers such as Belarus and Russia, as well as decreased supplies from Morocco and China.

To fulfill expanding demand for fertilisers from its agricultural industry, which accounts for 15% of a $3 trillion economy, the world’s second largest producer of wheat and rice depends mostly on yearly import agreements and spot purchases.

“We have to take our relationship with fertiliser suppliers beyond just being buyer and seller,” Mandaviya told Reuters in an interview. “We want to have a strategic partnership with them through investment in their assets.”

He noted that Indian corporations are aiming to acquire holdings in phosphoric acid mines in Senegal, DAP mines in Saudi Arabia, and comparable assets in Africa and Canada.

India imports almost one-third of its annual soil nutrient demand of 60 million tonnes.

High prices as a result of Western sanctions imposed in the aftermath of the Ukraine crisis have resulted in record subsidy payments, as the Indian government provides farmers with fertilizer at rates substantially below the cost of production.

Mandaviya stated that the fertiliser subsidy might reach a new high of 2.5 trillion rupees in the current fiscal year ending March 31.

“Our priority is to get fertilisers and raw materials at lower prices to secure our food security and timely availability to our farmers,” he added.

India is one of the world’s largest importers of fertilizer, with more than half of its people involved in agriculture. Any change in its purchasing habits would have an impact on world pricing.

Long-term contracts were the “best bet” for securing supply despite geopolitical crises and easing the load on the Indian budget, Mandaviya said, adding that “suppliers are offering discounts ranging from 10% to 25% off international prices.”

He said that government-to-government discussions will assist Indian enterprises in finalizing long-term arrangements for fertilizer and raw material imports.

“We want to sign as many long-term deals as we can,” Mandaviya stated. “Our aim is to cut the role of mediator and traders and go for spot purchases only if they give us a price advantage.”

During the minister’s travel to Saudi Arabia next month, Indian businesses might sign 3- to 5-year arrangements to purchase 2 million tonnes of phosphatic fertilizer yearly.

Some businesses have already inked 5-year contracts for increased amounts of fertilizer and raw materials with enterprises in Jordan and Israel this year. 

In addition, India struck a three-year agreement with Russia’s Phosagro for 500,000 tonnes of DAP and extended a similar agreement with Omifco for a million tonnes of urea each year.

Source: Reuters

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