West Asia crisis opens space for fertiliser policy reform

Prime Minister Narendra Modi’s call to Indian farmers to cut chemical fertiliser consumption by half and move towards “natural farming” may not be practical or desirable. The underlying intent, though, may only be to curtail demand and push farmers to use fertilisers judiciously — which is sensible and necessary. Fertilisers supply essential nutrients to crops like nitrogen (N), phosphorus (P), potassium (K) and sulphur (S) for them to yield harvestable produce. Unfortunately, India has very little natural gas and hardly any rock phosphate, potash or elemental sulphur reserves to produce fertilisers, forcing heavy reliance on imports. That’s being tested now by the conflict in West Asia and closure of the Strait of Hormuz, through which up to 30 per cent of global fertiliser trade passed till recently.

Successive governments have erred by not just subsidising fertilisers — which entails outflow of scarce foreign exchange — but also encouraging the overuse of high-analysis products, especially urea and di-ammonium phosphate (DAP), causing severe soil nutrient imbalances. Farmers were initially applying fertilisers such as ammonium sulphate (containing 20.5 per cent N and 23 per cent S) and single super phosphate (16 per cent P and 11 per cent S). These gave way to urea and DAP, having very high (46 per cent) content of N and P respectively, with no other macro or micro nutrients. The nutrient use efficiency of the latter fertilisers is low; only around a third of the N in urea is absorbed by the plants, with the rest lost through volatilisation as ammonia gas or leaching underground after conversion into nitrate. Farmers require products that deliver nutrients more efficiently.

The government should simply free or raise the retail prices of fertilisers to their import parity levels. It can replace the existing product-wise subsidy regime with a per-acre payment of, say, Rs 5,000 for all cultivating farmers. The monies from both the fertiliser subsidy savings and PM-Kisan could be redirected towards a direct income support scheme. The West Asia crisis has made the present system of subsidy and price controls on fertilisers unsustainable both fiscally and physically: When product availability is itself a problem, how much can one subsidise? Either way, it opens up space for reform that cannot wait any longer.