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Thursday, June 1, 2023

Fertilizers go short in Bharat, farmers resort to black market

Farmers across several states like Rajasthan, Punjab, Madhya Pradesh, Manipur, Karnataka, etc. are facing acute shortage of urea and non-urea fertilizers like Di-ammonium phosphate (DAP), Muriate of Potash (MoP) right at the onset of Rabi crop sowing period which is a winter planting season for crops like wheat, mustard, rapeseeds and pulses.

As a result, there is a rage and panic being witnessed among the farmers across states and they insist to the Centre that any kind of delay in the adequate supply of fertilizers to them could adversely impact the sowing of crops for winters. The demand for these fertilizers in India is also the most during this sowing season.

Consequently, the farmers are switching to black market with shady agents who are taking good advantage of the desperate need of the farmers to sow, by charging exorbitant prices from them. Do farmers have a choice? Perhaps, farmers can either reduce the usage of fertilizers in sowing that could affect the output later or they pay skyrocketing prices on the black market that could potentially hurt the incomes of small and marginal farmers and become indebted. Currently one bag of DAP is priced at Rs. 1200 which is being sold at Rs. 1400 on black market.

Bharat is one of the most affected by the fertilizer crisis going on at international level induced by the rise in the input prices of crop nutrients as the tight coal and natural gas supplies forced some fertilizer plants in Europe to shut down. China supplies DAP to Bharat as the key supplier but currently China and Russia have cut down on their exports to keep up with their domestic supplies thereby affecting Bharat.

It’s the ongoing inflation of various other crops and fuel, ongoing farmer protests, erratic rainfall, affected global supply chain, shipping bottlenecks and reduced inventories of crop nutrients that were witnessed during the peak of pandemic, have altogether contributed to fertilizer crisis in Bharat. The global prices of non-urea fertilizers have been soaring for over 18 months now by more than 50% compelling the governments to increase their subsidies.

Bharat imports 1/3rd of its fertilizers and is known to be a biggest importer of urea and DAP. DAP is the second most commonly used fertilizer in Bharat after urea. Neem coated urea contains 46% nitrogen, DAP contains 46% phosphate and 18% nitrogen while MoP contains 60% potassium. Nitrogen, Phosphorous, Potassium and Sulphur (NPKS) are the crop nutrients priced at subsidised rates by the Centre under nutrient based subsidy (NBS) scheme.

DAP fertilizer is used at the beginning of sowing as it is high in phosphorous that stimulates root development. A farmer growing wheat or paddy may use about three 45 kg bags of urea, one 50 kg bag of DAP and half a bag (25 kg) of MoP per acre. Hence, any delay in the availability of fertilizers that are required in sufficient quantity shall lower productivity of crops and add up to inflation next year.

What can be done to resolve the crisis?

The Centre may have to import fertilizers from across the globe to fill the domestic requirements and procure requisite stocks of fertilizers to make them available to farmers across states. Bharat is working towards making long term deals with suppliers in Oman, Jordan, Morocco and Russia to prevent such shocks in future.

Perhaps, higher subsidies can be given to fertilizer companies to sell Di-ammonium phosphate (DAP) to ensure that non-urea fertilizers are priced at reasonable levels in the market.

The subsidy is paid to fertilizer companies as compensation for selling products to farmers below market prices. Indeed, the Centre had increased its share of subsidy for DAP by 140% from Rs. 500 to Rs. 1200 per bag of 50kg a few months ago owing to increase in MRP of DAP from Rs. 1200 to Rs. 1900 per bag by all fertilizer companies. Undoubtedly, this effort taken by the Centre puts extra burden on its revenues but on the other hand shouldn’t the decision have come earlier to raise subsidies to plan for Rabi sowing season!

Centre must not focus giving too many subsidies on urea otherwise urea is diverted towards non-agricultural uses.

Farmers must be trained with better technical know-how on building up new organic form of fertilizers instead of being too much dependent on import of fertilizers that we need the most.

Sources –

Indian Express

Hindustan Times

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Criti Mahajan
Criti Mahajan
An MBA graduate in finance with 5 years of working experience in the financial services space. An enthusiastic research writer inclined towards understanding economics and policy making with an experience of diversified writing on professional platforms in economics. A self-starter, perseverant and an ardent learner.


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