Urea off-take for Rabi 2019 was not particularly thrilling – despite having crossed the 3 million tons mark for the first time in five years. The cumulative Rabi urea off-take is up just 3 percent year-on-year. Urea's gain has proven to be DAP's loss – as the application of the vital but often sacrificed phosphate fertilizer is down by 17 percent year-on-year to 1.1 million tons.

The drop in DAP off-take has been rather more pronounced in the last three months, showing a slide in double digits, capping a five month consecutive period of year-on-year drop. Something tells that farmers' economy has not really improved to the extent to absorb the entire price hike. Urea prices soared by 27 percent year-on-year during Rabi 2019, while that of DAP increased by 25 percent in the same period.

The nitrogen deficient soil would mean farmers would generally sacrifice DAP application in favour of urea. The total spending on urea and DAP combined in Rabi 2019 amounts to Rs191 billion – higher by 18 percent from Rabi last year. This is also the highest year-on-year increase in combined urea and Dap spending in at least eight years.

The spending on urea alone constitutes 57 percent of total spending at Rs108 billion – higher by a massive 31 percent. Recall the urea prices have soared by 27 percent during the period. The axe invariably falls on DAP spending – as evident by a massive drop in off-take, despite a year-on-year increase in DAP spending by 6 percent. The NP ratio has worsened to a four year low at 2.6.

Farmers have time and again demonstrated that urea remains fertilizer of choice. And farmers will not go beyond a certain threshold to buy more DAP – especially when prices of both commodities are on the rise. Assessment on the monetary loss of the wheat crops is yet to be precisely made. But what can be said with certainty is that farmers' economy will not have improved from the havoc that the recent rains caused. This could lead to a Kharif season with dull off-take as the farmers walk the tight rope.

The government may have to come up with a special subsidy program beyond the current one, to help keep the fertilizer application afloat.