Rationalising prices – Excess use of urea should be contained

Source: The post is based on the article “Rationalising prices – Excess use of urea should be contained” published in the Business Standard on 20th June 2023

Syllabus: GS 3 – Issues related to direct and indirect farm subsidies and minimum support prices.

Relevance: About bringing urea under NBS.

News: Recently, the Commission for Agricultural Costs and Prices (CACP) has recommended that urea should be brought under the nutrient-based subsidy (NBS) regime, like all other fertilisers.

The Objective is to a) foster parity in the prices of fertilisers containing nitrogen (N), phosphorus (P), potassium (K), and other plant nutrients, and b) ensure fertiliser applications are balanced and need-based.

What is the need for bringing urea under NBS?

Overuse of Urea: The unduly low price of urea, vis-a-vis other fertilisers, has resulted in the overuse of nitrogen and inadequate application of other equally essential nutrients, including some vital micro and secondary plant nutrients. This has consequently adversely affected the soil health and its fertility. For instance, the consumption of urea increased by over 33% since 2010. But other fertilisers registered only marginal gains. The latest estimates reckon the NPK use ratio at 13:5:1, instead of the ideal 4:2:1.

Increased fertiliser requirement: Due to the above issue, higher doses of nutrients are now required to get the same level of crop yields. Continuing this situation would severely impact farming, particularly profitability, which has already been severely eroded.

Increasing fertiliser subsidies: Farm scientists have been demanding the inclusion of urea under NBS ever since the mechanism of NBS was conceptualised in 2010. But successive governments have rejected it as urea pricing is a politically sensitive issue. As a result, fertiliser subsidies have touched a high of nearly Rs, 2.3 trillion in 2022-23.

Failure of other measures: Initiatives like mandatory neem-coating of urea, and the introduction of soil health cards were intended primarily to promote judicious use of plant nutrients. But these measures have failed to produce the desired results.

Considering the above points, rationalising prices seems the best way to restore the nutrient-use balance for the sake of sustainable agriculture.

Why it is the right time for bringing urea under NBS?

Due to the re-commissioning of three defunct fertiliser plants and the availability of innovative Nano urea, domestic production of urea has begun to increase and the need for imports is waning rapidly. Further, the Russia-Ukraine conflict has eased fertiliser prices. So, the government thus should take this opportunity to rationalise fertiliser prices, as advised by the CACP.