Packaging material crunch hits fertiliser, seeds companies

New Delhi: India's fertiliser and seed companies are grappling with a packaging material shortage triggered by the ongoing Iran war, which could hinder deliveries to farmers during the critical sowing season, said industry executives.

The crunch comes after a month-long disruption in fertiliser availability, adding to the industry's woes as companies say switching packaging isn't easy due to compatibility and redesign constraints.

Plastic packaging prices have risen 70-80% and paper costs are up 15-20%, while supplies remain tight despite higher prices, executives said, adding that suppliers have switched to spot pricing, setting aside the earlier contracts.


For the seed industry, packaging is highly time-sensitive, as processing and packing are concentrated during March-April, said Raghavan Sampathkumar, executive director, Federation of Seed Industry of India, noting that seeds must be packed and dispatched to markets ahead of the sowing season.

"Seed is a living material, prone to infestations if appropriate packaging is not used, leading to deterioration during transport and storage. Hence the seed industry uses poly-materials derived essentially from crude oil," he said, emphasising that the impact of the ongoing Iran war would be most pronounced for key kharif crops such as paddy (rice), millets and maize.

It is difficult for the industry to switch to alternatives, as compatibility and redesign cannot happen in such a short period, according to executives. Although packaging accounts for a fraction of the total cost of fertiliser, with prices of packing materials increasing, costs are bound to increase sharply from April, said Rahul Mirchandani, president, Indian Micro Fertiliser Manufacturers Association.

The most affected fertilisers are the low-value segments such as bio-fertilisers, organic fertilisers, phosphate-rich organic manure, stimulants and subsidised fertilisers, where packaging accounts for 4-10% of end product cost, said Rajib Chakraborty, president, Soluble Fertiliser Industry Association.