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Farming crisis: India faces fertiliser crunch ahead of key sowing season
A steady rise in global prices of fertilisers, low production of raw materials during the peak of the Covid-19 pandemic, and shipping bottlenecks are the main reasons behind the farming crisis
Escalating global prices and a supply-chain squeeze have hit the availability of fertilisers in India, threatening the coming winter sowing season. The crisis has left cultivators in various states scrambling for crop nutrients, such as in Punjab.
A sharp increase in international prices, lower production of feedstock or raw materials during the peak of the pandemic, and shipping bottlenecks are the key reasons behind the crisis.
Inventories of crop nutrients, especially DAP (diammonium phosphate) and the muriate of potash (MPO), have hit a five-year low, the managing director of one of India’s biggest crop-nutrient firms has revealed said, requesting not to be named.
The Centre as well as state governments have pressured authorities to crack down on hoarding, as farmers in Punjab say they are being compelled to buy some nutrients above the label price.
On October 14, the government revamped parts of its subsidy regime for fertilisers and crop nutrients to continue providing them at below-market rates, while special discounts were announced for the summer sowing season heading into the coming winter sowing months.
International prices of raw materials for crop nutrients such as DAP and 22 grades of P&K fertilisers have been increasing for over 18 months now, trade data shows. Most of these fertilisers have seen a jump of over 50% in prices, forcing the government to expand subsidies.
India offers subsidies to compensate fertiliser companies who sell them at below-market rates.
The country imports up to a third of its fertilisers to meet domestic demand. China, the largest producer of DAP, is a key supplier of the nutrient to India.
“Prices have gone through the roof and urea, for instance, is very expensive to buy. That is the main issue,” said KS Raju, chairman of the board at Nagarjuna Fertilisers and Chemicals, a top conglomerate.
Although the government has announced additional subsidies under its nutrient-based subsidy regime worth ₹28,602 crore, manufacturers could still be buying at a slower pace.
“Since extra capital is required because of higher global rates, purchase deferment is taking place, adding to the shortage,” said Ashok Agrawal of Comtrade, a commodities trading firm. Shipments, however, were expected to increase, he said.
Data show that India needs to ratchet up imports as stocks are running low. During the summer sowing months, DAP demand outstripped availability by 13.6%, official data accessed by HT show.
“Indigenous production of urea at 7.89 million tonnes and DAP at 1.11 million tonnes during April-July 2021 declined by 3.9% and 12.3%, respectively, over April-July 2020,” wrote Satish Chander, the director-general of Fertiliser Association of India, in the latest issue of the Indian Journal of Fertilisers.
Rumours of a shortage have prompted panicked farmers to buy nutrients such as DAP in excess quantities, said Amrik Singh, an official of Punjab’s agriculture department. DAP is an essential nutrient for winter-sown wheat.
“I bought two bags for ₹1,400 each against the label price of ₹1,200,” said Lakhbir Singh of Nizampura Vegetable Growers’ Association in Punjab.
The Centre has called upon the railways to increase the number of rakes ferrying fertilisers to states such as Punjab, Haryana and Uttar Pradesh, a fertiliser department official said, requesting anonymity.
