Delayed Paddy Transplantation Hits Urea Demand in Telangana

Demand for urea has decreased sharply in Telangana due to postponement of paddy sowing due to insufficient rainfall and reduced consumption of fertilizers during the Kharif season.

Farmers, who usually compete to purchase urea during the planting season, are staying away this year as planting has been postponed due to the rainfall deficit caused by El Niño.

Urea is widely used at different stages of paddy cultivation to promote vegetative growth. However, although rice seedlings have reached the planting stage, many farmers cannot start planting yet due to lack of water.

Farmers who purchase fertilizer at the beginning of the season also use less urea since they are planted in a smaller area.

Decreased demand resulted in large stocks of urea being unsold. According to factory sources, around 2.5 lakh tonnes of urea produced by Ramagundam Fertilizers and Chemicals Limited (RFCL) lies in government warehouses and dealer outlets.

RFCL, which produces around 3,850 tonnes of urea per day, supplies fertilizer to Telangana, Andhra Pradesh, Tamil Nadu, Karnataka and Maharashtra, accounting for around 60 to 65 per cent of Telangana sales.

Approximately 65,000 tonnes of urea were supplied to Telangana in April and May and 55,000 tonnes in June, with the expectation that demand would increase during the Kharif season. The target for July was set as 45,000 tons. However, most of the stocks were not sold.

Under Point of Sale (PoS) system, subsidy to RFCL is released only after farmers purchase the fertilizer. Factory sources said sales have dropped significantly to barely 100 tonnes per day currently, from around 4,000-4,500 tonnes per day in the same period last year.

With reduced PoS transactions delaying subsidy payments, the company is facing financial pressure as it needs around Rs 400 to 450 crore every month for maintenance and operating expenses.