This is despite the fact that imports have been at the lowest level at six lakh tonnes.

Industry sources said that the usual amount of inventory in urea is around 12-14 lakh tonnes in a season. The reasons cited for the huge inventory is a better than normal production during the year and a poor offtake due to unseasonal rains.

Production surpassed normal trends to touch 96 lakh tonnes as against 84-85 lakh tonnes last year. While the urea sales at around 100 lakh tonnes is the same as compared to the previous year, the industry had expected the growth in sales to be of the order of 5 per cent per annum.

Of the 30 lakh tonnes inventory, 27 lakh tonnes is lying in the fields while the balance is in the company silos. Going by the higher demand forurea, which is a popular fertiliser being cheaper than the other decontrolled fertilisers, total imports generally top 25 lakh tonnes in a year.

Major companies which manufacture urea are Tata Chemicals and Indo Gulf Corporate from the private sector, and Iffco, Kribhco and RCF from the public sector.

RCF, for instance, is holding an inventory of around 1.75 lakh tonnes.A huge stock of urea was built up because offtake had been affected due to unusual weather patterns and unseasonal rains in certain northern parts of the country.

Insight

The build up of urea inventories in the country is no cause for alarm - at least not yet. Though growth in food-grain production is likely to be lower than expected in the current year, the inventory build-up is not a mere reflection on poor agricultural output.

Rather, it has mainly been caused by a higher opening stock of finished material and a rise in output of urea companies during the year. The rabi season is likely to see good demand for the nutrientand the higher inventory will only mean that imports into the country will be lower. Urea companies have on their part been doing well and the half-yearly results of most of these companies are expected to be better than the corresponding period in the previous year.