Opinion Express View: Farm dos and don’ts

The Narendra Modi government can take credit for insulating Indian farmers from the volatility in international prices of fertilisers and their raw materials over the last two years or so. Take urea, which was being imported into India at $900-1,000 per tonne in November-January 2021-22. It dropped to below $300 towards June-July 2023, but has again risen to about $400. Landed prices of imported di-ammonium phosphate (DAP) similarly peaked at $950-960 per tonne in July 2022 and fell to an average $440 a year later, only to climb to $595 levels now. All through these fluctuations, the maximum retail price (MRP) of urea has been kept unchanged at Rs 5,628 per tonne. Even the MRPs of the so-called decontrolled fertilisers have been frozen — at Rs 27,000/tonne for DAP, Rs 29,400-29,500 for complexes such as 10:26:26 and 12:32:16, and Rs 33,000-34,000 for muriate of potash (MOP) — with companies simply “told” not to charge more.

These price controls, formal or otherwise, have no doubt ensured adequate supplies of fertiliser and shielded farmers from the global price shocks post the Russia-Ukraine war. But they have come at a cost. The Centre’s fertiliser subsidy outgo, which was Rs 81,124 crore in 2019-20, has shot up to Rs 1,53,758 crore in 2021-22, Rs 2,51,339 crore in 2022-23 and a budgeted Rs 1,75,100 crore this year that is likely to be overshot. Fiscal unsustainability apart, there is the environmental cost from farmers applying too much nitrogen and probably even phosphorus at the expense of all other nutrients. Agricultural scientists consider the ideal nitrogen:phosphorus:potassium ratio for Indian soils at 4:2:1. For the recent kharif cropping season, this ratio was estimated at close to 11:5:1. It shows that farmers today have little incentive to use MOP and other potassium-containing fertilisers costing more than urea and DAP. It would be even worse with respect to sulphur and micronutrients. The impact of such imbalanced nutrient use on crop productivity, produce quality and soil health in the medium and long run is something that should concern policymakers.

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There are two things that the government must do sooner than later. The first is to bring urea under the nutrient-based subsidy regime. Decontrol its MRP along with all other fertilisers that are technically already decontrolled. Once decontrolled — if necessary, in stages — a per-tonne subsidy can be given on each fertiliser (including urea) linked to its nutrient content. Farmers will, then, start looking beyond urea. The second step is to extend the subsidy on a per-hectare basis. The government should let farmers buy any kind of fertiliser using this money. It will also force companies to come out with new value-for-money fertiliser products that are crop-, soil- and agro climatic region- specific.