West Asia conflict raises fertiliser concerns; IFFCO moves to stabilise supply

Hyderabad: In a few weeks, hundreds of millions of farmers will begin sowing their Kharif crops, but fertiliser supplies are caught in the middle of a war. The Strait of Hormuz, through which flows the bulk of India’s urea, ammonia and LNG imports, has been effectively shut since US-Israeli strikes on Iran began February 28.

Ammonia prices have surged 24 per cent, while Crisil Ratings warned domestic fertiliser production could fall 10–15 per cent if disruptions persist for three months. Crisil estimates the additional hit to the government’s subsidy bill at Rs20,000–25,000 crore, on top of a fertiliser subsidy budget already pegged at about $12.7 billion for the current fiscal year.

IFFCO, the country’s top fertiliser cooperative, has flagged the risks while outlining mitigation steps. “Any material increase in international fertiliser or raw material prices could have implications for the government’s fertiliser subsidy outgo, given that India operates a price-controlled fertiliser regime for farmers,” K J Patel, Managing Director, IFFCO, told Bizz Buzz. “We are working diligently to manage input costs through prudent procurement and diversified sourcing, and are in continuous coordination with the Department of Fertilisers to ensure that any such impact is minimised and managed within the broader policy framework.”

Patel also highlighted the uncertain operating environment. “The geopolitical situation in West Asia has introduced volatility in global energy markets and created disruptions in natural gas and fertiliser supply chains internationally,” he said. “The evolving situation has introduced some uncertainty in global shipping and logistics. Contingency planning is in place.” India’s structural dependence on West Asia remains significant. The region accounts for roughly 40 per cent of urea and DAP imports, 60–65 per cent of LNG and 75–80 per cent of ammonia supplies. Since the strikes began, vessel traffic through the Strait has slowed sharply, with shipping companies halting journeys as insurance premiums spiralled. Potash, entirely import-dependent, adds to the vulnerability. “We have optimised domestic production at high capacity utilisation levels, pursued strategic global sourcing through long-standing international relationships, and accelerated supply chain diversification to reduce dependence on any single geography,” Patel said. “Our overseas joint ventures are being closely monitored and as of now, no significant production disruptions have been reported at our international partner plants.” For now, the numbers offer some comfort. Current inventories stand at around 180 lakh metric tonnes, sufficient for the next two to three months. “At present, there are no significant disruptions in our import of key raw materials. Our DAP plants are operating normally and adequate channel stock of urea is in place,” Patel said. “We do not foresee any disruption in fertiliser availability for the upcoming Kharif season.”

However, the cushion may prove temporary. Kharif demand typically peaks at nearly 193 lakh MT of urea and 46 lakh MT of DAP, making timely restocking critical as peak consumption arrives in May and June.

On farmer-level prices, Patel drew a firm line. “IFFCO remains fully committed to ensuring fertilisers continue to be available to farmers at accessible prices and in adequate quantities. That is our mandate as a farmer-owned cooperative.” Over the longer term, Patel pointed to IFFCO’s nano fertiliser push as a structural hedge. Sales of Nano Urea have reached 2.74 crore bottles in 2025–26 so far, with Nano NPK now FCO-approved. “This is a sustained, long-term effort and not merely a reactive measure,” he said. “Long-term fertiliser security also requires expanding domestic production, maintaining robust buffer stocks, and strengthening international joint ventures to secure stable access to key raw materials, regardless of where the next global crisis originates.”