A major factor fuelling resentment among farmers is the spiralling prices of fertilisers that are critical in the production of agricultural products. There are two types of fertilisers: Urea— the predominant source of nitrogen or ‘N’ nutrient supply— and phosphate and potash fertilisers— the source of ‘P’ nutrient and ‘K’ nutrient; there are 22 grades of such fertilisers and the most widely used are Di-Ammonium Phosphate (DAP) and Muriate of Potash (MOP). The Maximum Retail Price (MRP) of urea is controlled by the Centre at a low level and is unrelated to the cost of production and distribution which is higher (the excess amount is reimbursed to the manufacturers via the subsidy on a ‘unit-specific’ basis under the New Pricing...
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Category: Nutrient Based Scheme (NBS) for P & K
P&K fertilizers – subsidy conundrum
A major factor fueling resentment among farmers is the spiraling prices of fertilizers which are critical inputs used in the production of agricultural products. The maximum retail price (MRP) of urea – the predominant source of nitrogen or ‘N’ nutrient supply – is controlled by the Centre at a low level un-related to the cost of production and distribution which is higher (the excess amount is reimbursed to the manufacturers via the subsidy on a ‘unit-specific’ basis under the new pricing scheme or NPS in short). This price has remained unchanged (today’s price is the same as in 2002) even as all cost escalations are absorbed by increasing the subsidy. However, the worry is with regard to another category of...
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Fertiliser DBT an illusion
Despite tall claims made by the UPA and the NDA dispensations since 2012, a gradual transition to direct cash or benefit transfer of subsidy to the farmers has not been done The additional provision of Rs 65,000 crore towards fertiliser subsidy (over and above the Rs 71,000 crore allocated in the Budget for 2020-21), that was announced by the Finance Minister under “Stimulus- III” on November 12, will help in clearing all pending dues to the industry. This has led the latter to believe that this is a precursor to a gradual transition to direct cash or benefit transfer (DBT) of subsidy to the farmers. This is illusory, as despite tall claims made by the UPA and the NDA dispensations...
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Fertilizer DBT – miles away
Under the “Stimulus – III” unveiled on November 12, 2020, the union finance minister, Nirmala Sitharaman made an unprecedented announcement of releasing an additional Rs 65,000 crore towards fertilizers subsidy over and above Rs 71,000 crore allocated in the budget for 2020-21. For an industry used to not getting thousands of crores in subsidy dues year-after-year for several decades in the past, this has come as a big bonanza in as much as the amount will help in clearing almost all of their pending dues. But, the Fertilizer Association of India (FAI) – an umbrella organization of fertilizer manufacturers – is reading a lot more into this decision. It is seeing this as a precursor to structural reforms in this...
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Curbing urea use by half
On December 5, 2017, in his Mann Ki Baat radio address, the Prime Minister said, “Can our farmers take a pledge to reduce urea use by half by 2022? If, they promise to use less urea in agriculture, the fertility of the land will increase and the lives of farmers will start improving.” For this, Modi had in mind a time frame of 5 years Currently, there is excessive use of urea — a dominant source of ‘N’ vis-à-vis complex fertilizers such as diammonium phosphate (DAP) the main source of ‘P’ and muriate of potash (MOP), the main source of ‘K’. This has led to an increasing imbalance in the NPK use ratio. On an all-India basis, currently this ratio...
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Hoping for a coronavirus-induced fertilizer reforms
Even as Prime Minister Narendra Modi has declared his intent to use Covid–19 as an opportunity to implement big bang reforms, the government is silent on fertilizers – a sector that has been crying for reforms for far too long. To put things in perspective, let us take a look at some basic facts on existing policies. Prior to the 1990s, both urea –main source of nitrogen (N)–and phosphate (P) and potash (K) fertilizers such as di-ammonium phosphate (DAP) and a whole range of complex fertilizers containing N, P&K in different proportion etc, fell under pricing and distribution controls. The maximum retail price (MRP) of each fertilizer was controlled at a low level and excess of cost of production and...
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Fertilizer reforms – Corona connection
Amidst all the bad news on the economic front under a prolonged lockdown, the meteorological department has come out with some good news for fertilizers – the most crucial agricultural input that help in increasing crop yield. The department has predicted normal monsoon with the country as a whole receiving 100 per cent of the long period average (LPA) of 88 centimetre rainfall. This together with substantial increase in cash in the hands of farmers [record procurement of wheat by government agencies viz. Food Corporation of India et al at the minimum support price (MSP) alone has given them about Rs 40,000 crore; direct income support of Rs 2000/- each to about 9 crore farmers under PM KISAN yielding Rs 18,000 crore...
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Curbing excess urea use – remove policy shackles
For decades, farmers in India have been resorting to indiscriminate and excessive use of chemical fertilizers [source of plant nutrients such as nitrogen ‘N’, phosphate ‘P’, potash ‘K’ besides a host of secondary and micro-nutrients; which put simply, are food for crops in as much the same way as cereals, fruits, vegetables are essential for human beings] leading to deterioration in soil health, adverse impact on the environment and imperiling public health. The mother soil is the repository of these nutrients [or ‘food for crops’], the precise quantum in any given location depends on a multitude of factors such as their stock to begin with when farmers started cultivating the land [say 100 years ago or even earlier], addition from...
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Why half-baked fertilizer reforms won’t deliver
If the government wants to restrict subsidised supply only to small and marginal farmers having landholding size <2 hectares, this will require two streams of supplies in the distribution channels viz. The Union government controls the maximum retail price (MRP) of urea at a low level, unrelated to the cost of production and distribution, which is much higher. —————————————————————————————————— Reportedly, the government is likely to fix nutrient-based subsidy (NBS) rate for urea before rolling out the direct cash transfer (DCT) of urea subsidy to farmers’ accounts. The subsidy, expressed as rupees per hectare, will be based on soil health, and size of landholding. The idea of NBS for urea is not new. It was recommended, in 2012, by a...
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Fertilizer – half-baked reforms won’t deliver
According to report in a leading economic daily [citing an official involved in policy making], “the government is likely to fix nutrient-based subsidy [NBS] rate for urea before rolling out the direct cash transfer [DCT] of urea subsidy to farmers’ accounts. The subsidy – fixed on per hectare – will not be universal for farmers across the country and will be based on soil health and size of the landholding. Tenant farmers would also be eligible to get the subsidy on production of valid tenancy documents. To assess the implications, let us first take a look at the existing dispensation of subsidy on urea and non-urea or phosphate [P] and potash [K] fertilizers and how the two differ. How will...
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