Context

Balanced fertilization will be a key policy goal for the new government after the Lok Sabha elections.

• The financial Year  2023- 2024 saw urea consumption hit a record 35.8 million tonnes (mt), 16.9% higher than the 30.6 mt in 2013-14

About Balanced Fertilization

The requirements of nutrients such as Nitrogen, Phosphate and Potash are soil and crop specific. The use of the right ratio of nutrients as per soil or crop requirement is known as “balanced fertilization”.

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• Objective: 

  • To correct soil nutrient deficiency and improve the quality of crops.
  • To maintain or improve soil fertility and restore soil fertility impaired through imbalanced fertilizer use

• Need: 

  • To discourage farmers from over application of only primary nutrient based fertilizers like  urea, di-ammonium phosphate (DAP) or muriate of potash (MOP).

• Initiative: 

  • The Nutrient-Based Subsidy (NBS) system: 
    • The government fixed a per-kg subsidy for N, P, K and S, linking subsidy on any fertiliser to its nutrient content.
    • Objective: To induce product innovation and move away farmers from urea, DAP (18% N and 46% P content) and MOP (60% K), in favour of complex fertilisers containing N, P, K, S and other nutrients in balanced proportions with lower concentrations.
  • Neem coated urea:
    • Mandatory  neem oil coating of all urea came into effect from 2015, and  was intended to check illegal diversion of the highly-subsidised urea for non-agricultural uses like in  plywood, dye, cattle feed and synthetic milk makers.
    • Neem oil also acted as a mild nitrification inhibitor, allowing more gradual release of nitrogen. 
    • Improved nitrogen use efficiency resulted in bringing down the number of urea bags required per acre with the government reducing the bag size from 50 to 45 kg in 2018
  • Price control measures for non-urea fertilizers:  Department of Fertilizers (DoF) in their new guidelines imposed indirect MRP controls on non-urea fertilizers by capping the profits that companies can earn from their sales.
    • It prescribed maximum profit margins that will be allowed for fertilizer companies ie. 8% for importers, 10% for manufacturers and 12% for integrated manufacturers.
  • Sulphur coated Urea: 
    • The Union Government has recently approved the launch of sulfur-coated urea, containing 37% N and 17% S priced at Rs 266.50 per bag of 40 kg, as against 45 kg for the neem coated urea, translating into a 12.5% price hike.

• Challenges: 

  • Pricing mismatch: The restoration of price controls on Non- Urea fertilizers has worsened the nutrient imbalances with  di-ammonium phosphate (DAP)  becoming the new urea with farmers inclined to over-apply both.
    • Example: The current MRP of DAP, at Rs 1,350 per 50-kg bag, is below the Rs 1,470 for the 10:26:26:0 and 12:32:16:0 NPKS complex fertilisers.
  • Unaffordable Muriate of Potash (MOP): MOP is retailing at  Rs 1,650 per bag which disincentives not only  farmers to apply it  directly but also companies to incorporate it into NPKS complexes.
    • Example:  The most widely consumed complex fertiliser, 20:20:0:13, contains no potassium  which is concerning trend  as potassium boosts the immunity of crops against pests and diseases as well as uptake of nitrogen.
  • Failure of the Nutrient-Based Subsidy: The Nutrient Based Subsidy scheme failed simply because it excluded Urea. Urea’s MRP is government controlled which resulted in only a minute increase in the prices by  just 16.5 per cent post Nutrient-Based Subsidy introduction, making it cheaper thus facilitating over use by farmers. 
  • Import dependency: India is heavily import-dependent in all types of fertilisers, be it of finished products or intermediates and raw materials. High global prices add to the country’s foreign exchange outgo and also the government’s subsidy burden.

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• What needs to be done?

  • Maintain price hierarchy: Price Hierarchy needs to be ensured among non-urea fertilizers by  pricing DAP the highest, MOP the lowest and complexes in between.
  • Restricted use of DAP: DAP should be mainly restricted  to rice and wheat with other crops meeting  their P requirement through complexes and SSP. 
  • Enhancing acceptability: Market DAP  in granular, and  not powdered, form. Granules are less prone to adulteration with gypsum or clay, while also enabling slower release of P without drift during application.
  • Rationalize MRPs of fertilizers: This could involve bringing urea under NBS and mitigating the impact of a significant hike in its MRP by increasing the subsidy rates on other nutrients.
  • Super Phosphate: Government should promote the use of super phosphate in the country which is an important source of supply of P, S and calcium.