Fertiliser prices surge globally amid Hormuz crisis. Will farmers be impacted?

Currently, India has about 19.02 million tonnes of fertilisers in stock, compared to a requirement of 39.05 million tonnes for the kharif season.

In Short

• India’s fertiliser subsidy bill may rise 20% in FY26 due to global price surge
• Government keeps maximum retail price of fertilisers unchanged for farmers
• West Asia supply disruptions, especially Strait of Hormuz, drive price hikes

India’s fertiliser subsidy bill could rise by around 20% this financial year as global prices of key nutrients surge amid supply disruptions linked to the Strait of Hormuz, reported Mint.

The expected increase comes at a time when global fertiliser prices have nearly doubled, driven by rising geopolitical tensions in West Asia that have disrupted supply chains and pushed up input costs.

Despite this, the government is unlikely to pass on the burden to farmers.

PRICES RISE, BUT FARMERS PROTECTED

Officials have indicated that there will be no change in the maximum retail price (MRP) of fertilisers in India, even as global prices move higher.

“The prices have almost doubled but there is no change in MRP of fertilisers,” a senior official said, adding that the government will step in through higher subsidies to absorb the impact.

This means farmers are expected to continue getting key fertilisers such as urea, di-ammonium phosphate (DAP) and potash at existing prices.

Fertiliser subsidies are paid directly to companies, which helps keep prices stable for farmers and supports farm incomes.

India’s fertiliser subsidy stood at an upwardly revised Rs 1.86 lakh crore in FY26. For the current financial year, it was initially estimated at Rs 1.71 lakh crore in the Budget.

However, with global prices rising sharply, officials have indicated that additional spending will be required.

“Of course there are going to be additionalities,” a senior official said, pointing to the likelihood of a higher subsidy outgo.

WHY PRICES ARE RISING

The spike in fertiliser prices is linked to disruptions in West Asia, particularly around the Strait of Hormuz, a key global shipping route.

India depends heavily on imports for fertilisers and raw materials, making it vulnerable to such global shocks.

West Asia accounts for:

• Around 30% of India’s urea supply
• About 30% of DAP requirements
• Nearly 50% of LNG needs, which is used in fertiliser production

Any disruption in this region directly impacts availability and pricing.

INDIA’S IMPORT DEPENDENCE

India is the world’s second-largest consumer of fertilisers and the largest importer of DAP and urea.

The country meets about 60% of its DAP demand through imports, along with around 15% of its urea and NPK requirements.

It also relies on imports for key raw materials such as rock phosphate, phosphoric acid and potash.

This makes the fertiliser sector sensitive to global price movements.

STEPS TO ENSURE SUPPLY

To manage supply during the upcoming kharif season, fertiliser companies have issued a global tender for:

• 1.2 million tonnes of DAP
• 400,000 tonnes of triple super phosphate (TSP)
• 300,000 tonnes of ammonium sulphate

Officials said this will help ensure adequate availability during peak demand.

Currently, India has about 19.02 million tonnes of fertilisers in stock, compared to a requirement of 39.05 million tonnes for the kharif season.

The rise in global fertiliser prices is expected to increase the government’s subsidy burden, but farmers are unlikely to feel the immediate impact.

By absorbing the cost through subsidies, the government aims to keep farming viable and prevent a rise in food prices.

However, continued dependence on imports and global supply risks mean that the pressure on public finances could remain high in the coming months.

- Ends