Reasons for the shortage of di-ammonium phosphate (DAP) fertilizer

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Context: The article discusses India’s shortage of di-ammonium phosphate (DAP) fertilizer, caused by poor planning and outdated price controls.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?

1. 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.
2. 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.
3. Decreased Domestic Production: Domestic production fell to 21.5 lt from 23.3 lt, further reducing available DAP for the rabi season.
4. 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.
5. 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.
6. 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?

1. 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.
2. 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.