Opinion Express View on urea prices: Fertiliser for thought

The maximum retail price (MRP) of urea has remained unchanged at Rs 5,360 per tonne during the nine years and more of the Narendra Modi government. The only revision, if at all, has been from companies having to mandatorily coat their entire material with neem oil since May 2015, for which they could charge an extra 5 per cent or Rs 268 per tonne from farmers. On Wednesday, the Union Cabinet approved the “continuation of the urea subsidy scheme” with a view to ensure supply of the fertiliser “at the same price”. Towards this, it has committed a total amount of Rs 3,68,676.7 crore over three years till 2024-25. That works out to roughly $45 billion for subsidising a single nutrient product, whose average production/import cost is in the region of Rs 30,000 per tonne.

The decision not to raise the urea MRP till 2024-25 has, ironically, been announced along with a PM-PRANAM scheme that aims to promote alternative fertilisers and balanced plant nutrition. The truth is that urea sales in India crossed a record 35.7 million tonnes (mt) during 2022-23, as against 30.6 mt in 2021-22. The Modi government’s initiatives such as compulsory neem coating, reducing the bag size from 50 kg to 45 kg, and launch of the so-called Nano Urea haven’t helped bring down the consumption of this fertiliser containing 46 per cent nitrogen (N). The reason is simple: When urea retails at a fifth or even less than that of most other fertilisers, why should farmers cut back on its use? It’s another thing that the disproportionate application of N has, over time, resulted in diminishing crop yield response. Studies have shown that 1 kg of N, P (phosphorus) and K (potassium) used to yield 12 kg-plus of cereal grains during the 1960s, but only 5 kg now.

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The Modi government has proposed the introduction of sulphur-coated urea, which, it claims, would be more economical and efficient than the plain-vanilla fertiliser. The idea of using urea as a carrier product for delivering sulphur or zinc to crops isn’t bad. In fact, the government should allow urea, di-ammonium phosphate and other commodity fertilisers to be freely coated with all secondary and micro nutrients. Further, the MRPs of such fortified fertilisers must be set free. If the yield benefits from applying sulphur or zinc-coated urea are significantly more from ordinary urea, the farmer may not mind paying extra. And that could also pave the way for the price decontrol of urea and bringing it under the nutrient-based subsidy regime.