Disproportionate use of urea in agriculture over the years has been one of the primary reasons for worsening plant nutrient imbalance
Keeping urea out of NBS essentially means that the government has retained direct control over MRP of urea and its subsidy. Representative photo: iStock. The Commission for Agricultural Costs and Prices (CACP) has recommended the Centre to bring urea under the nutrient-based subsidy (NBS) regime to address the problem of imbalanced use of nutrients.
The recommendations come four months after the government told Parliament that there was no proposal to shift urea to NBS, a scheme introduced in 2010, which links subsidy to the nutrient content of fertilisers.
“Fertiliser response and efficiency has continuously declined over decades mainly due to imbalanced use of nutrients, deficiency of micro and secondary nutrients and depletion of soil organic carbon, while fertiliser subsidy has been rising,” said the CACP report.
The commission, thus, recommends that steps should be taken to bring urea under NBS regime to address the problem of imbalanced use of nutrients, noted the report, Price Policy for Kharif crops, The Marketing Season 2023-24.
Disproportionate use of urea in agriculture over the years has been one of the primary reasons for worsening plant nutrient imbalance. Urea does not come under NBS, which includes non-urea fertilisers like phosphorous and potassium. Keeping urea out of NBS essentially means that the government has retained direct control over MRP of urea and its subsidy.
Also read: How green is the urea sector?
The MRPs of other fertilisers have been under indirect control by virtue of NBS policy. Manufacturers of these fertilisers have the freedom to fix MRP within “reasonable limits”, and a fixed per-tonne subsidy linked to their nutrient content is given.
This has caused their MRPs to increase over the years, whereas urea’s price has remained unchanged. This has led to tilting of the usage of fertilisers in favour of urea because farmers have overused it, owing to its low pricing, thus resulting in deteriorating soil health.
While the price of urea was fixed at Rs 5,360 per metric tonne (MT), the price of DAP (Di-ammonium phosphate) was at Rs 27,000 per MT in April. Given this difference, sales of urea touched 11.77 lakh metric tonnes (LMT) in April. On the other hand, sales of DAP and NPK were recorded at 3.02 LMT and 2.62 LMT, respectively, according to figures from the Ministry of Chemicals and Fertilizers.
India is one of the largest producers and consumers of fertilisers in the world, and fertiliser consumption has increased significantly over the years.
“However, fertiliser response and efficiency has continuously declined over decades mainly because of imbalanced use of nutrients, deficiency of micro and secondary nutrients and depletion of soil organic carbon,” the report said.
The main cause of the nutrient imbalance is price distortions resulting from fertiliser subsidies, which have grown dramatically and continue to increase rapidly, the document added.
It also recommended a cap on the number of subsidised bags of fertilisers per farmer, as has been done for subsidised LPG cylinders. The CACP said this would reduce the government’s subsidy burden, releasing resources to invest in agriculture research and development and infrastructure development.
“It can be implemented easily since sale of subsidised fertilisers to farmers is made through Point of Sale devices installed at retailer shop and the beneficiaries are identified through Aadhaar Card, KCC, Voter Identity Card etc,” it pointed out.
For Kharif season 2023-2024, the government approved Rs 1.08 lakh crore as fertiliser subsidy on May 17, 2023. Out of this, Rs 70,000 crore will be spent for urea subsidy and Rs 38,000 crore for subsidy for DAP and other fertilisers.
Meanwhile, global fertiliser prices have eased from their 2022 peaks but still remain at historically high levels. “High and volatile international prices of fertilisers and raw materials remain a big challenge for ensuring timely and adequate availability of fertilisers at affordable price to farmers,” the report said.
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