Indian farmers have been blessed with a good monsoon for a second consecutive year. Not surprisingly, they have responded by significantly ramping up acreages in the current kharif cropping season, especially under rice and maize. However, their enthusiasm has been dampened by reduced fertiliser availability. Crops need water and also nutrients for optimal plant growth and grain yields. This time, not only has supply been insufficient to meet the increased demand from timely and well-distributed rains, stocks of urea on August 1 were about 57 per cent lower than a year ago. The last couple of years had seen shortages of di-ammonium phosphate (DAP). This year, even urea and complex fertilisers are in short supply, with reports of farmers queuing up for hours before retail outlets and still unable to procure their bare minimum requirement of bags.
The situation has been blamed largely on China, which supplied 21.5 lakh tonnes (lt) and 22.9 lt out of India’s total 80.1 lt imports of urea and 56 lt of DAP respectively in 2023-24. As imports from China plunged to just over 1 lt of urea and 8.4 lt of DAP in 2024-25, and hardly any shipments so far in this fiscal, it has led to a substantial depletion of stocks. But the government here is equally to blame. It probably didn’t anticipate the higher demand, particularly for urea. Rice and maize areas are up 9.8 per cent and 11.8 per cent respectively this season. Both are high nitrogen-demanding crops, unlike pulses or soyabean that require very little external urea application and whose acreages have actually fallen. Poor demand assessment apart, not much effort went into sourcing more material from other suppliers — be it West Asia, Russia and Nigeria for urea or Morocco, Jordan, Egypt and Tunisia for phosphates. That complacency is hurting farmers in a bountiful monsoon year. Hopefully, there will be fewer issues during the upcoming rabi winter planting season. The lifting of export curbs by China following the recent thaw in bilateral relations should help.
The present situation is also no less due to the excessive controls stifling India’s fertiliser industry. Firms cannot sell urea and DAP at more than Rs 266.5 and Rs 1,350 per bag respectively. The basic retail price of urea has been unchanged since November 2012, with imports, too, allowed only through state trading enterprises. It makes these fertilisers naturally prone to diversion and black marketing in the event of the slightest shortage. It’s time to decontrol the sector and de-canalise urea imports. Let prices float and imports come in freely, which will incentivise companies to increase the supply of material to match demand. The government can maintain a minimum stock of major fertilisers to enable market intervention and prevent any price gouging.
