Published on February 17, 2014

Fertilizer subsidies are a key driver of world fertilizer consumption and the countries subsidizing fertilizers was estimated for about 55% of world demand. Most countries in developing Asia subsidize fertilizers. In recent years, India had seen a surge in its fertiliser subsidy budget and as per the estimates of fertiliser ministry, for the year 2014-15 the fertiliser subsidy had pegged at around Rs. 70,000 crore which is marginally higher than Rs. 68,000 crore meted out in 2013-14.

In the recent years, Bangladesh had also revised its subsidy scheme which had boosted consumption of potash. Amidst the range of allied fertiliser policies, fertiliser subsidies have the greatest impact on the demand of fertiliser. However, it is very difficult to predict the changes to subsidy schemes. The world demand of fertiliser is foreseen to augment by 2.0% to 179.5 Mt in 2013-14, owing to favourable market conditions in all the major fertiliser markets and a progressive rebalancing of fertilisation practices in India.

According to the researched report, the baseline estimated for 2014 and the H1 of 2015 is the subject to downside and upside risks, in particular to the evolution of fertiliser subsidy schemes, weather related crop shortfalls and the evolution of world economic activity. At this stage the forecast to 2014-15 are speculative in view of the high volatility of agricultural commodity market and uncertainties about the evolution of fertiliser subsidy schemes in some of the major fertiliser consuming countries.