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The index of fertilizers as per core sector data showed a dip of 0.75% on the annual basis in April 2024. The index stood at 117.83, witnessing a modest growth on monthly basis. In April 2023, it had logged an impressive 23.5% spike in annual terms. Demand looks steady for fertilizers sector on aggregate basis as monsoon is likely to be good and should lead to early sowing of some kharif crops. The Indian Meteorological Department (IMD) has updated its Long-Range Forecast Outlook for the Southwest Monsoon Rainfall Season (June–September) 2024. Quantitatively, the southwest monsoon seasonal rainfall over the country as a whole is likely to be 106% of the long period average (LPA) with a model error of ± 4%. Thus, Above Normal rainfall is most likely over the country as a whole during the monsoon season (June to September), 2024.
Organic fertilizers in demand globally
According to a latest update from ResearchAndMarkets, the global market for organic fertilizers is estimated at USD 7.9 billion in 2024 and is projected to reach USD 13.6 billion by 2029, at a CAGR of 11.5% during the forecast period. The surge in organic food consumption, driven by increasing consumer preferences for healthier and environmentally friendly products, has prompted farmers to transition to organic farming practices. As the organic food market expands, there is a corresponding rise in the demand for organic fertilizers to sustain soil fertility and crop health without the use of synthetic chemicals.
This trend emphasizes the interconnected relationship between consumer demand for organic products and the essential role of organic fertilizers in supporting the organic industry's growth. For example, according to the 2023 Organic Trade Association, organic food sales in the US surpassed USD 60.0 billion in 2022, marking a significant milestone for the resilient organic sector. Total organic sales, encompassing both food and non-food organic products, reached a record USD 67.6 billion, highlighting the robust growth of the organic market. Rise in organic food sales fuel demand for organic fertilizers market.
The increase in organic food sales directly contributes to the rise in demand for organic fertilizers. This is primarily due to the fact that organic farming practices, which exclude the use of synthetic chemicals and pesticides, rely heavily on organic fertilizers to maintain soil fertility and provide essential nutrients to crops. As consumer awareness about health and environmental concerns grows, there is a corresponding increase in demand for organic food products.
Consumers are increasingly seeking out organic produce for its perceived health benefits and reduced environmental impact. This surge in demand for organic food drives farmers to adopt organic farming practices, which in turn leads to an increased need for organic fertilizers to support crop growth. For example, according to FiBL & IFOAM - Organics International (2023), organic retail sales in Europe amounted to USD 64.42 billion.
Outlook:
Recent trends reflect that India will continue to reduce its dependence on imported Urea. Domestic production of urea increased by about 10 percent for the second consecutive year in FY24. Cumulatively, urea production increased by 63.4 lakh tonnes in the last two fiscal years or from FY22. Meanwhile, India’s urea import has dropped 7 per cent in 2023-24 fiscal, for the third consecutive year, due to increase in its domestic output and launch of nano-urea. There is also a decline in import of Di-ammonium Phosphate (DAP) and complex fertilizers, which led to overall imports falling 10 per cent in 2023-24 fiscal.
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