POT CORP
.. Viewpoint especially with all the naysayers talking about potential oversupply.
taken From POT corp conference call in January.
Mark Gulley:
Good afternoon. Bill, you talked a little bit about India in terms of their P and K requirements versus their current demand. Can you remind us of what their P and K demand should be if they were truly doing balanced nutrition for their crops?
Bill Doyle:
Well, they're almost 9:1 right now, N to K. They should be 3:1. So you know, they got to 6.5 million, 6.4 million, 6.5 million tonnes of potash imports and they were getting that N to K ratio just a little under five so they need to be up in the 10 million, 11 million tonne range and they're not anywhere near that. And so when you see the potassium deficits in India -- and this is where the private sectors, just they're so upset because they know what's happening.
And even the value of what they are producing, you know, the wheat and the rice not having the nutrient value that it should have because where do those crops get their nutrients from? They get it from the soil and, if the potassium is seriously lacking in the soil, the crop is just not going to get it. It's not going to be as nutritious and that's part of the problem. They've got people that are undernourished and so they really -- this is an urgency in India and the private sector, they're own agronomists would tell you it's a matter of national emergency. So that's why I say that they should move on the K front.
Stephen, do you want to comment on the phosphate side?
Stephen Dowdle:
Oh, they have a similar situation in phosphate as well. It's not quite as dire as in potash. India does have their own domestic phosphate industry, which they want to support, but there is under-application of phosphate as well and, over time, we would expect their consumption in phosphate to grow, assuming that they're going to address this imbalance.
Bill Doyle:
When Stephen says they have their own phosphate industry, of course it's not indigenous and not based on phosphate rock. They don't have that, but they do import phosphoric acids. They're number one in the world in acid and they do produce DAP. So that's what when we refer to their phosphate industry, it's more in the downstream.
Operator:
The next question is from Fai Lee of Odlum Brown. Please go ahead.
Fai Lee:
Hi, Bill. I think, if I recall correctly, with the nutrient-based subsidy program, I think the original intent was to maybe drive the nutrient down from 6:1 down to 3:1, but we've moved completely in a different direction and I think everyone would agree that an analysis would indicate that's been a complete failure on that front. So I'm just wondering, it seems like a Gordian knot sometimes, but what do you think is going to cut through it? Is it going to be like food inflation, crop failure or just simply a matter of passage of time, working its way through the Indian bureaucratic system in terms of resolving this situation?
Bill Doyle:
Hi, Fai. It's great to hear your voice again, Fai. So I'm going to pass on your question to Stephen.
Stephen Dowdle:
Well that's a very good question as to what's going to untie the Gordian knot. You know, politics are thick and a lot of different parties with entrenched interests, sometimes conflicting, but I would say that, on a positive note, that we do see genuine alarm and concern in certain sectors and particularly within the industry and particularly within the private sector of the industry that they know that this is not sustainable what's happening in India today. They see the damage that's being done to the soil fertility. They see that they need to correct this. You know, they're in a bit of a pickle themselves because, you know, they're trying to fight through their own political system and there's no clear answer. But I'm encouraged the fact that this alarm has been raised on many different levels throughout the country and I do believe it's just a matter of time before we see a reversal of what's been going on here for the past two years.
Bill Doyle:
You know, Fai, the private sector, a lot of people don't understand this, but their biggest receivables, outstanding receivables are from the government on the subsidy. And so when you look back from their financial condition, I mean the government's got them a little bit under the gun as well because, you know, there are six month minimum delays on payments and those are the biggest receivables these companies have so they can't scream publicly, but they do privately. And so we do expect a change coming.