Exclusive: India halts potash imports as droughts hit crop plantings | Reuters

MUMBAI India has halted its potash imports for the year to end-March and delayed negotiations for next year's purchases until at least June, as droughts have dented demand in one of the world's biggest fertilizer consumers, government officials said.

The decision, which has not been previously reported, is India's first pause in potash imports in years and will be tough on suppliers already reeling from weak demand as China and Brazil also trim their buying.

Major suppliers to India include Uralkali, Potash Corp of Saskatchewan, Agrium Inc, Mosaic, K+S, Arab PotashCo and Israel Chemicals.

Spot prices of potash, a crop nutrient, are at 8-year lows of around $230 a tonne, down by more than a quarter from a year ago.

"Demand is weak due to the drought," said P.S. Gahlaut, managing director of state-run Indian Potash Ltd, the country's biggest importer. Gahlaut said India had 1 million tonnes of potash inventory despite cutting back on imports.

India's move to halt its potash imports underscores the country's changing position in global commodities markets because of a deepening crisis in its farm sector.

Successive droughts have slowed plantings of crops including rice, wheat, sugarcane, corn, cotton, soybean and rapeseed, and cut the need for fertilizer. But this is also turning India into a net buyer for commodities for the first time in years.

The agriculture sector, which employs some two-thirds of India's 1.25 billion population, poses a risk to Prime Minister Narendra Modi's economic growth ambitions.


The suspension of imports means India will buy less potash this year than it had planned.

Last May, Indian fertilizer producers including Rashtriya Chemicals and Fertilizers Ltd (RCF), IFFCO and Chambal Fertilisers and Chemicals agreed to import a total of 4.5 million tonnes of potash, with an option to increase that to 5.2 million tonnes.

So far this fiscal year, they have shipped in only 3 million tonnes, and will not be buying any more, industry officials said. An official at state-run RCF said the government has also taken the rare step of restricting movement of imported fertilizers in an effort to cut down on imports.

India usually opens negotiations for potash imports in February, with new contracts signed before the start of the fiscal year in April. Gahlaut, who is part of that negotiating process for India, said talks would now start only in June.

Contracts signed by India and China typically become benchmarks for other potash buyers in Asia, such as Malaysia and Indonesia.


Government and industry officials say India's potash imports are unlikely next year to regain levels of over 4 million tonnes seen in the past few years.

Gahlaut sees imports of around 3.5 million tonnes in the year starting in April, and even that would depend on monsoon rains in June-September which deliver about 70 percent of the country's annual rainfall and sustain nearly half of India's farmlands that lack irrigation.

"If the monsoons deliver good rainfall then we will need to import around 3.5 million tonnes," Gahlaut said. "If (the rains) fail like this year the requirements would be much smaller."

(Reporting by Rajendra Jadhav; Editing by Mayank Bhardwaj and Ian Geoghegan)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date: Feb 17, 2016 18:54 PM

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