The agriculture sector in our country is in a state of crisis. Its share in GDP has come down over the years. The sector has suffered a setback in the recent years as witnessed from the growth rate of only 2% per annum during 9th plan period and about 2.3% during the 10th Plan against a target of 4%. The average economic growth during the last four years ranged between 7.5% and 9.4% per annum, but there is hardly 2% growth in the agricultural sector during this period.

FOOD SECURITY AT STAKE

Food security has been endangered in the recent times with stagnation or rather decline in per capita availability of foodgrains leading to resumption of large scale import of wheat at exorbitant prices and looming shortage of rice in the country. The task of achieving self-sufficiency in food has been a formidable task and sustaining the same is more challenging.

To meet the food demand of the growing population of our country about 300 million tonnes of foodgrains is required to be produced by the end of 1st quarter of this century against the presently stagnated production level of around 210 – 212 million tonnes. In view of limited scope for increasing the land area under cultivation, further increase in agricultural production can be achieved only through better water management, expansion of the area under irrigation, improved farming practices, research and development in scientific use of inputs and seeds and the last but not the least, more extensive and balanced use of fertilizers. While the measures required to be taken with regard to irrigation and water management, seeds and insecticides are of critical importance, the scope of the present write up is restricted to the vital input of fertilizers, its availability & extensive and balanced use.

FERTILIZER CONSUMPTION – INDIA & REST OF THE WORLD

Fertilizer is a key input in increasing productivity in agriculture. The agricultural production of the country went up from 50.82 million tonnes in 1951 – 52 to around 200 million tonnes during 2000-01 and it is on record that more than 50% of this enhanced production has come from the increased use of fertilizers. It is needless to mention that for every additional unit of fertilizer consumption, increase in agricultural production ranges between 8.09 to 12% or more. The average growth in consumption of fertilizer nutrients in our country have steadily increased from 1st to 3rd Five year plan period which dropped substantially to 10% level during the 4th plan period and remained stagnant up to the 5th Plan Period. The growth rate again dropped abnormally to only 2.4% at the end of 8th plan period. The growth rate was 4.9% per annum during the 10th five year plan period which was higher than the previous two plan periods. In absolute terms, though consumption of plant nutrient (N+P+K) per hectare of arable land in our country increased significantly from 100 kg per during 2002-03 to 116.51 kg during 2007-08, it is far behind the developed countries and even the developing countries. There is therefore ample scope and necessity to increase the consumption of fertilizer nutrients to bring the country back to a position of self-sufficiency and gradually transform it in to a food grain surplus nation.

GROWING DEMAND OF FERTILIZERS AND IMPORT DEPENDENCE

The domestic production of Urea and DAP are quite insufficient to meet the requirement. The consumption of total fertilizer nutrients (N2+P2O5 + K2O) touched an all time high level of 22.04 million tonnes during 2006-07 attaining a growth of 8.4% over the previous year. It has resulted in significant widening of the gap between consumption and domestic production of fertilizers forcing the country to resort to heavy import of all the three major fertilizers, viz, Urea, DAP and MOP. The import of Urea touched an all time high level of 4.72 million tonnes. Import of DAP & MOP was to the tune of 2.88 million tonnes and 3.45 million tonnes respectively.

As a result of over dependence on import, the prices of urea and DAP in the international market has jacked up in the recent past to a record high. Urea Price, which was US$ 280.75 fob per MT in January 2007 increased to US$ 403.75 fob per MT in January 2008 and US $ 815 fob per MT in August 2008. Price of DAP, which was US $ 320.5 per MT in January 2007 increased to US$ 802 per MT in January 2008 and US $ 1331 per MT in May 2008. MOP price, which prevailed at US $ 170 fob per MT in January 2007 went up to US $ 328 fob per MT in January 2008 and US$ 945 fob per MT in October 2008. Sharp increase in international prices of finished fertilizers has proved beyond doubt that self reliance in fertilizer production cannot be compromised.

The working group for XIth plan period has projected a demand of 28.755 million tonnes of urea by the end year of the plan period i.e. 2011-12. The demand of DAP would be around 9.51 million tonnes by that time. Similarly the projected demand of Complex Fertilizers, SSP and MOP would be to the tune of 9.33, 4.56 and 3.74 million tonnes respectively. The policy decision for both nitrogenous and phosphatic sector should be so formulated that domestic production becomes sufficient to meet the demand.

GOVERNMENT’S LATEST DECLARATION ON FERTILIZER POLICY

The Union Government through a press release dated 18/02/2010 announced urea price rise by 10% and declared urea will continue to be under the current MRP regime while nutrient based subsidy (NBS) policy for decontrolled Phosphatic and Potassic fertilizer has been announced with effect from 1st April 2010. It has also been declared that subsidy will continue to be disbursed through the industry. Under this regime the subsidy on the nutrients shall remain fixed and the retail price of the subsidized fertilizer will be decided by the companies. The intent of the Government to move towards NBS in fertilizer sector was announced in the Budget Speech of 2009-10 by the Finance Minister and now this cabinet decision. It has been widely discussed and deliberated upon for quite a long period. There have been mixed reaction to the decision with the manufacturers welcoming it and most of the trade unions and kishan sabhas opposing the move.

The Government has claimed that the NBS regime is expected (a) to promote balanced fertilization (b) increase agricultural productivity through higher usage of secondary and micro nutrients (c) develop new innovative fertilizer products (d) depict the actual demand of fertilizes in the country (e) promote realistic pricing of fertilizer products in the international market and (f) attract fresh investments in the sector.

NUTRIENT BASED SUBSIDY (NBS) POLICY

It has been decided to fix the subsidy on the fertilizer nutrients ‘N’ – Nitrogen, ‘P’ – Phosphorous, ‘K’ – Potash and ‘S’ Sulphur contents. The NBS regime will be applicable to DAP, MOP, TSP, SSP and the 12 grades of complex fertilizers which are already covered under the current subsidy regime. The secondary and micro nutrients in such fertilizers will attract a separate per tonne subsidy. Since the subsidy on the nutrients shall remain fixed, the selling price of fertilizers at farm gate level will be decontrolled and will be determined by market forces and the retail price of the subsidized fertilizer will be decided by the companies.

POSSIBLE EFFECTS OF NBS

As a result of this policy decision of the Government, prices of fertilizers will spiral upwards. Any product allowed to be imported freely and allowed to be marketed freely will attain market price around the Import Parity Price (IPP) plus the import duties and cost of transportation from place of import to the distribution centre minus nutrient subsidy within a short period. That is to say the market will deepen and will settle around the IPP.

The maximum retail price (MRP) of DAP and MOP as on date is Rs.9350/- and Rs.4355/- per tonne. Since April 2008, the Government granted IPP to the DAP manufacturers and the difference between the international price and MRP was being paid as subsidy to the importers and manufacturers under the then concession scheme. Now some procedure will be adopted to pay subsidy on DAP & MOP considering DAP’s ‘N’ and ‘P’ and MOP`s ‘P’ content which will remain fixed and the importers / manufacturer will be allowed to decide the MRP which will naturally hover around the import price minus the subsidy granted which will never be at the level of the present MRP since the nutrient subsidy shall remain fixed.

Similar will be the conditions with the complex fertilizers (NPK fertilizers) which again will be sold at a price fixed by the importers and manufacturers. Thus the present level of MRP will show a sharp increase.The price of Urea which is the richest nitrogenous fertilizer and which has the maximum tonnage consumed has been increased from Rs.4830/- to Rs.5310/- per tonne. As a result of sharp increase in the MRPs of all brands of fertilizer including Urea the cost of production of all crops shall have a sharp rise and the effect thereon is well understood. Due already to higher cost of agricultural inputs and non-remunerative support price the agriculture community specially the small and marginal farmers have lost interest on agriculture and there are instances of gradual concentration of land in the hand of big farmers/multinationals. This in turn is sure to affect the food security of the country to a larger extent.

HOAX GOVERNMENT CLAIMS

Now on the Government’s claim that NBS regime is expected (a) to promote balanced fertilization (b) increase agricultural productivity through higher usage of secondary and micro nutrients (c) develop new innovative fertilizer products (d) depict the actual demand of fertilizes in the country (e) promote realistic pricing of fertilizer products in the international market.

a)      Balanced Use of fertilizer – There is a wide variation in NPK use ratio in our country. It was 6.0:2.4:1 against an ideal condition of 4:2:1. Zone wise NPK use ratio is also a matter of concern. During 2006-07, the use ratio was 4.1:1.6:1 in East Zone, 6.3:3.0:1 in West Zone and 3.1:1.5:1 in South Zone. These are in sharp contrast to 19.6:5.8:1 in North Zone. It is necessary that efficient use of every kilogram of valuable input like fertilizer through proper promotion and education management is ensured as fertilizer use efficiency at farm level has got tremendous importance in boosting up agricultural production. Agro-scientists are of the opinion that an extra yield of 30-40 million tonnes of foodgrains can be harvested by adopting proper scientific package of practices. There is urgent need to convey this package of technology to the farmers. But what the Government’s steps are? They have closed down the famous ‘Fertilizer Promotion & Agricultural Division’ (FPARD) under Hindustan fertilizer Corporation. During the last decade not a single such organisation has been formed and if the Government thinks that NBS regime will automatically promote balanced fertilization, we are afaid, they are living in a ‘fools paradise’.

b)

b & c) Agricultural productivity & development of Innovative fertilizer products – The cultivable land in our country is one of the highest but the productivity is much much lower than the developed / developing countries. A studyduring 1999-2000 revealed that productivity in Kg per Ha in our country is 1938 only whereas in USA, France, Germany, UK, China, Japan and even Bangladesh are 5676, 7149, 6574, 6846, 4791, 2665 and 2679 Kg/Ha respectively. Merely setting the target is not sufficient, effective steps are also required to be taken. Here again inadequacy in public investment towards irrigation is a vital cause.

There is none to advise integrated pest management system. No body is available to promote Integrated Plant Nutrient System (IPNS), Watershade Development, Rainfed Farming, Dry land farming. There is no exercise on seed multiplication or any short of agricultural research and the Governmnet expects all these to automatically develop with the introduction of NBS regime.

d) Depiction of actual demand – In absence of any agency for promotion of balanced use of fertilizers it is hard to understand how the actual demand could be understood.

e)Realistic prices – The present exercise will surely arrange fixation of MRP for all fertilizers around the international level. It has been our experience that fertilizer prices in the international market rises whenever there is increase in import of fertilizer by India. With the closure of several nitrogenous and phosphatic fertilizer plants in the public sector and there being no virtual addition to the capacity of these fertilizers during the last decade, India will remain import dependent and will be governed entirely by the whims of the fertilizer cartels. If the Government withdraw their support, the agricultural sector will be the worst sufferer and food security will be serioulsy endangered.