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Govt mounts ‘hub-and-spike’ supply model to ease fertiliser crunch ahead of key sowing season
The Union government has formed a ‘crack team’ to ensure priority movement of fertilisers to key food-bowl states as fears of shortage have sparked panic buying of crop nutrients
The Union government has formed a ‘crack team’ to ensure priority movement of fertilisers to key food-bowl states as fears of shortage have sparked panic buying of crop nutrients.
For the first time, a hub-and-spoke model was being implemented to reach supplies from nearly 50 factories and ports to be about 1000 railheads, backed by real-time tracking, as farmers scrambled for key crop nutrients.
Officials are redirecting railway rakes, or wagons, to areas of shortage and are holding a series of meetings with fertiliser firms and their dealers to quicken shipments to Punjab, Rajasthan, Haryana and Uttar Pradesh.
Escalating global prices and a supply-chain squeeze have hit the availability of fertilizers, threatening the oncoming winter-sown or rabi farming season.
Cultivators have been making beelines for crop nutrients in many districts of states, such as Punjab, where they said some key farm chemicals were selling at higher than label rates.
“We are sure there will be no crisis. The team is monitoring movement and dispatch of fertilisers and coordinating with port authorities and railways to ensure faster movement (of fertilisers),” an official of the fertiliser department said, requesting anonymity.
Additional railways rakes, or train wagons, were being made available to ship fertilisers on a priority basis and at short notice, the official said.
Inventories of key crop nutrients, especially DAP (diammonium phosphate) and murate of potash (MPO), have hit a five-year low, the managing director of one of India’s largest crop-nutrient firms said, requesting anonymity.
A sharp increase in international prices, lower production of feedstock or raw materials during the peak pandemic phase and shipping bottlenecks are key reasons for the crisis.
The Union, as well as state governments, have pressed authorities to crack down on hoarding, as farmers in grain-bowl Punjab said they were buying some nutrients above the label price.
On October 14, the Union government revamped parts of its subsidy regime for fertilisers and crop nutrients to continue providing them at below-market rates, while rolling over special discounts announced for the summer-sown season to the oncoming winter-sown months.
International prices of raw materials for some crop nutrients such as DAP and 22 grades of P&K fertilisers have been increasing for over 18 months, trade data show. 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 fertilizers to meet domestic demand. China, the largest producer of DAP, is a key supplier of nutrients to India.
“Prices have gone through the roof and urea, for instance, is very very expensive to buy. That is the main issue,” said KS Raju, chairman of the board at Nagarjuna Fertilizers and Chemicals, a large conglomerate.
Although the government has announced additional subsidies under the so-called nutrient-based subsidy regime - the mechanism by which the Centre disburses the subsidy to manufacturers –worth ₹28602 crore, manufacturers could 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. He said shipments, however, were expected to increase.
Data shows that India needs to ratchet up imports as stocks run low. During the summer-sown 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 farmers to panic and buy nutrients like DAP in excess quantities, said Amrik Singh, an official of the Punjab agriculture department. DAP is an essential nutrient for winter-sown wheat.
“I bought two bags for ₹1400 each against the label price of ₹1200,” said Lakhbir Singh of Nizampura Vegetable Growers Association in Punjab.
The Union government has asked railways to increase railway rakes ferrying fertilisers to states such as Punjab, Haryana and Uttar Pradesh, a fertilizer department official said, requesting he not be quoted.
