To ensure food security amid war clouds, government must reform fertiliser policy

UPSC Syllabus: Gs Paper 3- Agriculture

Introduction

Global conflicts such as US–Iran–Israel tensions and the Russia–Ukraine war highlight growing uncertainty in global supply chains. India faces a major risk due to its ~70% dependence on fertiliser imports and rising global prices. Food security depends directly on fertiliser availability, and disruptions can affect agricultural output. Natural farming cannot meet large-scale demand. This situation makes fertiliser policy reform essential to ensure stable supply, efficient use, and long-term food security in the country.

Strategic Importance of Fertilisers in Indian Agriculture

1. Critical input for crop productivity: Fertilisers, along with seeds and irrigation, are essential for higher yields and stable food production.
2. Economic backbone of agriculture: Agriculture contributes ~16% to GDP and supports ~46% of the population, making fertilisers vital for livelihoods.
3. Role in food self-reliance: Increased fertiliser use after the Green Revolution helped India achieve near self-sufficiency in food production.
4. India’s global standing: India is the second-largest consumer and third-largest producer of fertilisers, showing its large-scale dependence.
5. Growth in production capacity: Fertiliser production rose from 385.39 Lakh Metric Tonnes (LMT) to 503.35 LMT, with 76.2 LMT new capacity added, strengthening domestic supply.

Major Issues with India’s Fertiliser Sector

1. High import dependence: India depends on imports for ~70% of fertilisers and feedstocks, exposing it to global risks.
2. Dependence on imported gas for urea production: Domestic urea production relies on ~85% imported gas, increasing vulnerability.
3. Excessive use of urea: Farmers use more than required urea, leading to imbalance.
4. Distorted pricing system: Urea is sold at < $70/tonne while global price is ~$795/tonne, causing inefficient use and diversion.
5. Diversion and misuse: Low prices create arbitrage opportunities, leading to use in non-agricultural sectors and smuggling.
6. Low Nutrient Use Efficiency (NUE): Granular urea has only 35–40% efficiency, leading to wastage of nutrients.
7. Environmental and health impact: Excess use of nitrogen fertilisers leads to release of nitrous oxide, which is 273 times more harmful than CO₂  and also contaminates groundwater with nitrates, causing diseases like blue baby syndrome, thyroid problems, and diabetes.
8. Policy bias against efficient fertilisers: Liquid urea has ~90% NUE but is not subsidised, showing irrational policy.
9. Inefficient fertiliser composition: DAP contains 18% nitrogen along with 46% phosphorus, worsening nitrogen overuse.
10. Lack of TSP production: No domestic production of TSP with 46% phosphorus, despite need for balanced fertilisation.

Impact of Global Conflicts on Prices and Subsidy Burden

1. Sharp rise in urea prices: Urea prices increased by 65% from $482 to $795/tonne during conflict period. This directly increases import cost.
2. Increase in LNG prices: Gas prices rose by 63% from $12 to $19.5/MMBtu, raising production costs. This affects both domestic and imported fertilisers.
3. Rise in DAP prices: DAP prices increased by 15% from $627 to $720/tonne. This impacts availability of phosphatic fertilisers.
4. Supply disruptions from key regions: Limited access from Strait of Hormuz and Gulf countriescreates supply uncertainty. This affects timely availability of fertilisers.
5. Rising subsidy burden: Fertiliser subsidy increased to ₹1,91,836 crore, creating fiscal pressure. Government absorbs global price shocks.
6. Price protection for farmers: Urea price remains fixed at ₹242 per 45 kg bag since 2018. This ensures affordability but increases subsidy burden.

Government Initiatives and Progress

1. Nutrient Based Subsidy (NBS): Provides fixed subsidy on P (Phosphorus) and K (Potassium) fertilisers and allows price flexibility for companies.
2. Fertiliser subsidy support: The total fertiliser subsidy was raised to ₹1,91,836 crore, reflecting strong government support to protect farmers from global price rise.
3. Fixed price of urea: Urea is sold at a fixed price of ₹242 per 45 kg bag, with the government covering the cost difference through subsidy.
4. Special subsidy for DAP: A one-time subsidy of ₹3,500 per tonne was provided to keep DAP affordable despite rising global prices.
5. One Nation One Fertilizer (ONOF): The government introduced uniform branding as “Bharat Urea, Bharat DAP, and Bharat NPK” to ensure quality and reduce confusion among farmers.
6. Expansion of domestic production: The government has operationalised six new urea plants, adding 76.2 LMT capacity and increasing domestic production to over 314 LMT.
7. Nano fertiliser initiatives: The government promotes nano urea and nano DAP through field demonstrations, awareness campaigns, and availability at PMKSK centres.
8. Use of technology in application: Initiatives like Viksit Bharat Sankalp Yatra and Namo Drone Didi programme promote drone-based spraying of fertilisers.
9. Neem coated urea programme: The government mandates neem coating of urea to reduce nitrogen loss and improve efficiency, reducing fertiliser requirement by about 10%.
10. PM-PRANAM scheme: This Prime Minister Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth (PM-PRANAM ) scheme incentivises states to reduce chemical fertiliser use and promotes balanced nutrient application.
11. Promotion of biofertilisers: The government supports use of biofertilisers like Rhizobium, Azotobacter, and PSB through research and extension activities.
12. Soil Health Card scheme: Farmers are provided soil health cards that test 12 parameters and guide appropriate fertiliser use every two years.
13. Digital monitoring systems: Systems like Integrated Fertilizer Management System (iFMS) and Mobile Fertilizer Management System (mFMS)track fertiliser supply from production to retail and improve transparency in distribution.
14. International supply agreements: India has signed long-term agreements, including 3.1 million tonnes annual DAP supply from Saudi Arabia, and cooperation with Bhutan, Nepal, and Sri Lanka.

Way Forward

1. Rationalisation of urea supply: Reduce supply by 10–15% and allocate based on land records, crop patterns, and recommended doses.
2. Quantitative rationing mechanism: Use Essential Commodities Act to ensure controlled and efficient fertiliser distribution.
3. Direct benefit transfer reform: Provide subsidy directly to farmers on per-acre basis and include tenants who are currently excluded.
4. Correction of pricing distortions: Align fertiliser pricing with efficiency to reduce overuse and diversion.
5. Shift towards balanced fertilisation: Promote use of phosphorus through TSP and reduce excess nitrogen usage.
6. Promote domestic production of alternatives: Incentivise TSP production and collaborate with phosphatic-rich countries.
7. Identification of real cultivators: Accurate identification of landowners and tenants is necessary for effective DBT implementation.

Conclusion

India must treat fertiliser policy as central to food security in an uncertain global environment. High import dependence, rising prices, and inefficient use create serious risks for agriculture. Rational pricing, balanced nutrient use, and better targeting of subsidies are essential. Timely reforms can reduce misuse, improve efficiency, lower fiscal burden, and ensure stable and sustainable food production.

Question for practice:

Evaluate the need for fertiliser policy reforms in India to ensure food security amid rising global conflicts and supply uncertainties.

Source: Indian Express