Fertiliser supply disrupted, how does the government plan to meet the shortfall

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Fertiliser supply disrupted, how does the government plan to meet the shortfall

  • The war in Ukraine has disrupted fertiliser supply ahead of sowing for the kharif season.
  • India faces the challenge of meeting its requirement of fertilisers, the challenges include securing supply from new sources, costlier raw material, and logistics.

Impact of pandemic and the war

The pandemic has impacted fertiliser production, import and transportation across the world during the last two years.

  • Major fertiliser exporters such as China have gradually reduced their exports.
  • This impacted India, which sources 40-45% of its phosphatic imports from China.
  • There has been a surge in demand in regions like Europe, America, Brazil and Southeast Asia.
  • While the demand has increased, the supply side has faced constraints.

India’s Fertiliser Needs

The kharif season (June-October) is very crucial for India’s food security, a sizable quantity of fertiliser is required.

  • The Department of Agriculture and Farmers Welfare assesses the requirement of fertilisers and informs the Ministry of Chemical and Fertilizers to ensure the supply every year.
  • For kharif 2022:
    • The Center has pegged the requirement at 354.34 LMT.
    • Urea accounts for 179 LMT.
    • DAP for 58.82 LMT.
    • Muriate of potash (MoP) for 19.81 LMT.
    • NPK (nitrogen, phosphate, potash) for 63.71 LMT.
    • SSP for 33 LMT.
  • As per data shared, the opening stock of fertiliser available for the kharif season is 125.5 LMT, or 35% of the requirement.

Domestic Production of Fertilisers

The government estimates domestic production of fertilisers during the kharif season to touch 254.79 LMT

  • Urea - 154.22 LMT.
  • DAP - 27.92 LMT.
  • NPK - 48.65 LMT.
  • SSP - 24 LMT.
  • The government expects to import 104.72 LMT of fertilisers, most of it urea and DAP.
  • The “anticipated total availability” - opening stocks, domestic production and imports - will be 485.59 LMT.

Disruptions impact on prices

A steady increase in prices of raw material as well as logistics and freight costs in recent months.

  • The prices of fertilisers such as DAP and urea, and raw materials such as ammonia and phosphatic acid, have risen up to 250–300%.
  • The government has increased the Nutrients Based Subsidy (NBS) rates for kharif 2022.
  • The total fertiliser subsidy bill is expected to reach Rs 2.5 lakh crore this financial year, up from Rs 1.62 crore in the revised estimates for the previous fiscal.

Government’s augmentation of fertiliser

India has received shipments of 3.60 LMT of fertilisers from Russia since the beginning of the war on February 24.

  • India has made efforts to secure fertiliser supply from alternative sources such as Saudi Arabia and Iran.
  • Under a short-term agreement, Indian companies and PSUs have secured 25 LMT of DAP/NPK from Saudi Arabia for 2022-23.
  • For domestic production of urea, the government is focusing on the Matix (West Bengal), Ramagundam (Telangana) and Gorakhpur (UP) plants.

Way Ahead

Ahead of the start of kharif sowing, the Center has asked the states to ensure “micro-planning” of fertiliser movement as per requirement.

  • To ensure timely unloading of rakes for better utilization of the rolling stock.
  • To promote use of alternative fertilisers such as nano urea, and to take “strict” action against diversion, hoarding and black marketing of fertilisers.

Exam Track

Prelims Takeaway

  • Fertiliser Subsidy
  • India’s Fertiliser Needs
  • Domestic Production of Fertilisers