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Source: The post reasons for the shortage of di-ammonium phosphate (DAP) fertilizer has been created, based on the article “Express View on DAP crisis: Lessons from a fertiliser shortage” published in “Indian Express” on 4th November 2024
UPSC Syllabus Topic: GS Paper 3 – Agriculture -Issues related to direct and indirect farm subsidies.
Context: The article discusses India’s shortage of di-ammonium phosphate (DAP) fertilizer, caused by poor planning and outdated price controls. This shortage affects farmers’ planting. It suggests replacing price controls with per-acre payments to encourage efficient fertilizer use.
For detailed information on India’s fertilizer situation amid global crises read this article here
What are the reasons for the shortage of di-ammonium phosphate (DAP) fertilizer?
- Low Opening Stocks: Only 15-16 lakh tonnes (lt) of DAP were available as opening stocks on October 1, compared to the recommended 27-30 lt, highlighting poor advance planning.
- Reduced Imports: DAP imports were just 19.7 lt during April-September, down from 34.5 lt in the same period of 2023, limiting supply.
- Decreased Domestic Production: Domestic production fell to 21.5 lt from 23.3 lt, further reducing available DAP for the rabi season.
- Unviable Pricing Due to Price Controls: The government allows an MRP of Rs 27,000 per tonne and provides a subsidy of Rs 21,911. Combined, these do not cover the full cost (including import, bagging, and distribution) of Rs 65,000 per tonne, making it unprofitable for companies to import DAP.
- High Demand for Sowing Season: Farmers require DAP during sowing for crops like mustard, potato, and wheat. Good monsoon rains and crop prices have increased their enthusiasm to plant, intensifying demand.
- Farmers Paying Extra: Due to the shortage, farmers reportedly pay Rs 250-350 more than the government-fixed price of Rs 1,350 per 50-kg bag.
What should be done?
- Encourage alternative fertilizers: Promote the use of complexes and water-soluble fertilizers which are more efficient and can be directly applied to the crop’s root zone.
- Replace price controls and product-specific subsidies with flat per-acre payments each crop season, conditional on nutrient purchase. This proposal aims to encourage efficient fertilizer choices, benefiting crop growth directly.
Question for practice:
Examine the factors contributing to the shortage of di-ammonium phosphate (DAP) fertilizer in India and suggest potential solutions to address this issue.
