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Fertiliser Shortage: Farmers Stare at Economic Distress, Black Marketing

  • Category
    Economy
  • Published
    16th Nov, 2021

Context

A severe shortage of fertilisers has hit multiple states ahead of the Rabi harvesting season.

Background

  • As an agrarian country, India is home to numerous small and marginal farmers and is often plagued by low productivity and low quality.
  • Crops are mainly rain-fed and cultivated on a single piece of land over time, decreasing soil fertility in many regions.
  • Thereby, increasing quantities of nitrogen fertilizershave been used in the country.
  • Because of this, the Indian government has brought about economic reforms and has ensured that fertilizers are available at affordable prices to increase productivity.
  • Due to subsidy eligibility on notified fertilizers, the Indian fertilizer industry has been able to provide enhanced food security for the country.

However, this current problem of deficiency is a major concern for the country and can have a wide impact even on the food security. Therefore, it is important to have an analytical view of the ongoing situation.

Analysis

The state of the Indian fertilizer industry

  • As one of the country's eight core industries, fertilizer productionhas had positive growth since 2014.
  • India is among the largest consumers of fertilizers in the world, with domestic sales continually growing. 
  • The Indian fertilizer industry comprises of various government and private fertilizer companies which produce a variety of fertilizers:
    • Indian Farmers Fertiliser Cooperative Limited (IFFCO)
    • National Fertilizers Limited
    • Coromandel International Limited

Source: Rajya Sabha

What is Di-Ammonium Phosphate (DAP)?

  • DAP is the second most widely used fertilizer in India after.
  • Growers tend to apply this fertilizer just before or at the start of sowing, as it is high in phosphorus (P) which stimulates root growth.
  • It is a basic nutrient for Rabi crops.
  • DAP (46% P, 18% Nitrogen)is the preferred source of Phosphorus for farmers.
  • This is similar to urea, which is their favorite nitrogenous fertilizer containing 46% N.
  • DAP is an essential input for ensuring optimum productivity of wheat, which is sown on an area of about 35 lakh hectares in Punjab.

What about alternate fertilizers?

There are alternatives such as:

  • single super phosphate (SSP)
  • nitrogen phosphorous and potassium (NPK)

What factors determine fertilizer usage? 

  • Consumption of fertilizers and pesticides is determined by multiple factors such as
    • area of land under cultivation
    • the type of crop
    • cropping pattern and cropping intensity
    • soil type and its condition
    • agro-climatic conditions
    • the ability of farmers to purchase, irrigation, and others

Why is fertilizer important for feeding the world?

  • Nutrient supply: Fertilizers replace the nutrients that crops remove from the soil. 
  • Reduction of productivity: Without the addition of fertilizers, crop yields and agricultural productivity would be significantly reduced. 

Thus, in order to meet human nutritional needs in the crops and meat, it is required to replace what is taken out. 

Simplified (properties of fertilizers)

  • Provide nutrients not available in the soil
  • Replace nutrients removed at harvest
  • Balance nutrients for better produce quality and higher yield

What are the reasons behind the shortage?

  • External factor
    • Rising international prices
    • market volatility
  • The DAP fertiliser from the US, Russia and China fulfills 70% of the country’s need while the rest of 30% is manufactured domestically.
  • This year, the DAP production in China and two other countries was hit due to Covid-19, pushing the rates in the international market.
  • Internal factors
    • hoarding
    • black marketing
    • bad logistics

Conclusion

To correct the situation, the government needs to ensure priority movement of fertilisers to key food-bowl states as fears of shortage have triggered panic buying of crop nutrients.

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