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Fertiliser Costs Soar: Packaging Price Hikes Squeeze Industry
1 May
Summary
- Packaging costs surged 60-80%, significantly increasing production expenses.
- Gas prices remain a key vulnerability, causing a 20-45% hit to manufacturers.
- Industry seeks policy intervention, including export deregulation and subsidy increases.
The Indian fertiliser industry is experiencing significant stress due to rising input costs and supply chain disruptions. Packaging expenses have seen a dramatic increase, with some costs doubling, impacting overall production costs by 60-80%. Polymer and masterbatch prices have surged, leading to higher production costs for packaging solutions.
Gas remains a critical vulnerability for manufacturers, contributing to a 20-45% hit on their expenses. This has led to increased reliance on volatile spot trades for demand fulfillment. The industry anticipates a more substantial price shock in the second quarter, with the possibility of shrinkflation.
Stakeholders are urging policy intervention, advocating for measures such as an open general license for exports and the easing of restrictions on products like boron and zinc fertilizers. They also point to challenges in credit access and the slow approval process for new molecules.
Furthermore, a policy imbalance favoring heavily subsidized chemical fertilizers over non-subsidized biofertilisers discourages farmer adoption of alternatives. While the government promotes shifts to nano urea and organic options, industry experts suggest that a balanced nutrient mix is essential. Increased budgetary support and subsidy allocations are expected as the sector navigates geopolitical uncertainties and transitions to sustainable nutrient solutions.
