Q . Fertilisers overuse damages the soil, undermines the rural incomes, agricultural productivity, and thereby economic growth. Reform of the fertilizer sector would not only help farmers and but also improve efficiency in agriculture in the sector. Critically analyze. 12TH, NOVEMBER,2020 (10 Marks, 200 Words, GS-3)
- Briefing about the use of fertilizers and stats in the first para
- The second para about the issues with the fertilizers sector and use
- Next para about the reforms made and initiatives taken
- Final para to propose the further reforms needed.
Fertiliser use has seen rapid expansion and intensification in India and in other parts of the world with the spread of the Green Revolution technology. With the scope for raising production through the expansion of cultivable land exhausted, fertiliser will continue to play a key role in meeting the future requirement of food, feed and fibre. Therefore it is important that fertiliser is used judiciously and optimally.
Need for fertilizers–
- In India per hectare Consumption around (around 146 Kg) is far lower than developed countries.
- Indian Soils are deficient in Nitrogen and Phosphorus
- Fertilizer can most effectively be used with ample water. So rainfed areas (deprived of irrigation) constitute 70 % of agricultural land and still they use only 20% of national Fertilizers consumption. On other hand Rabi crops are dominantly produced in Irrigated areas, so they consume about 66% of fertilizers while their share of total agri output is 33%
- India meets its 80 % requirement of Urea (N), while it is heavily dependent on Imports for its potassium (K) and phosphorus (P) fertilizer requirements
- As per Economic Survey 2019, for the small and marginal farmers, the costs of fertilisers are key determinants of profitability of farming.
Government has certain policies for fertilizer sector–
- Nutrient Based Subsidy scheme 2010: applicable to 22 fertilisers (other than Urea) for which MRP will be decided taking into account the international and domestic prices of P&K fertilisers, exchange rate, and inventory level in the country. It aims to
- ensure that adequate quantity of P&K is made available to the farmers at statutory controlled price.
- ensure balanced use of fertilisers, improve agriculture productivity, promote growth of indigenous fertiliser industry and to reduce the burden of subsidy.
- New Urea Policy 2015: focusses on making the domestic urea energy efficient and reducing the subsidy burden.
- Neem Coated Urea (NCU): mandatory 100% production of NCU. Benefit includes-
- Slow down the dissolution of Urea into soil, resulting into less urea requirement.
- Stop the illegal diversion of urea for non-agricultural usages such as ingredients in chemical industry, explosives, etc.
- Gas Pooling: pooling of Domestic Gas with Re-Gasified LNG which is imported. This would help provide natural gas at uniform delivered price to all natural gas grid connected Urea manufacturing plants.
- Removal of minimum production criteria for manufacturers of Single Super Phosphate (SSP) making them eligible for subsidy irrespective of quantity of SSP produced and selling for agriculture purposes.
- Soil Health Card: Farmers can get their own customised requirement of fertiliser in order to avoid irrational use of it.
Issues and challenges associated with the fertilizers’ sector-
- Subsidy is paid to the companies only after the purchase of fertiliser by the farmer. In other words, the subsidy is still getting credited to the company and not the farmer. In that sense, it isn’t direct benefit transfer (DBT)
- Fertiliser subsidy has become a game of only three chemicals- NPK (nitrogen, phosphorus and potassium).
- There are huge discrepancies in the usage of fertiliser. In states like Punjab, the ratio of NPK usage is 61:19:1 against ideal 4:2:1
- In 1950, with the use of less NPK, the yield was more. Now, with the use of more NPK, lesser yield is being produced.
- Government is selling compost at a particular price and same is the rate for urea so this would not push the farmers towards organic farming.
- These subsidies will only help fertiliser companies to sustain their business but in the long run farmer input costs will continuously increase with inversely proportional output rates.
- Different inputs – urea, phosphatic and potassic fertilisers – have different rates of subsidies.
- It would be premature to accept that all the farmers would be able to buy their requirements of fertilisers at market rate and wait for 15 days or a month to get the subsidies.
- Fertilisers encourage urea overuse, which damages the soil, undermining rural incomes, agricultural productivity, and thereby economic growth.
- Fertiliser subsidies are generally criticised because they are perceived to be far from universally distributed and concentrated on relatively few producers, mainly large farmers.
- As per Economic Survey 2015-16: Distortions in urea are the result of multiple regulations. These distortions feed upon each other, and together create an environment that leads to a series of adverse outcomes.
- Firstly, urea is only subsidised for agricultural uses. Subsidies like this violate the One Product- One Price principle. Black market effects are aggravated by further regulation- canalisation.
- Secondly, the black market hurts small and marginal farmers more than large farmers since a higher percentage of them are forced to buy urea from the black market.
- Thirdly, some of the urea subsidy goes to sustaining inefficient domestic production instead of going to the small farmer.
Several suggestions for the reforms in the fertilizer sector includes-
- Subsidy should be linked to productivity which will remove fertilizer companies from the game.
- The momentum for these changes has to be created through robust policies.
- State Governments and Central Government need to work in tandem to encourage farmers for ecological farming.
- Particularly in western UP and Punjab, the farmers need to move away from wheat and rice because the ground water has depleted.
- Farmers have to be educated and taught to change their cropping pattern and move to multiple cropping.
- To secure long term fertiliser supplies from locations where energy prices are cheap, it might be worth encouraging Indian firms to locate plants in countries such as Iran, following the example of the Fertiliser Ministry’s joint venture in Oman, which allowed India to import fertiliser at prices almost 50% cheaper than the world price.
- Fertiliser is a good sector to pursue JAM because of a key similarity with the successful LPG experience: the centre controls the fertiliser supply chain.
- In order to address the distortions in urea-
- Decanilising Urea imports which would increase the number of importers and allow greater freedom in import decision- would allow fertiliser supply to respond flexibly and quickly to changes in demand.
- Bringing urea under the Nutrient Based Subsidy program currently in place for DAP and MOP would allow domestic producers to continue receiving fixed subsidies based on the nutritional content of their fertiliser.
- The NITI Aayog has also made several suggestions–
- Strengthen the SHC scheme to ensure SHC based fertiliser distribution at the ground level.
- Seed SHCs with the integrated fertiliser management system.
- Ensure proper functioning of the SHC labs.
- Link SHCs with Kisan credit cards and make SHCs mandatory for subsidies.
- Reorient fertiliser subsidy policy to bring secondary and micronutrients on the same nutrient based subsidy (NBS) platform as phosphorus (P) and potash (K)
- Subsidies on liquid fertilisers to encourage fertigation with micro-irrigation
- Fertiliser sector should procure compost produced out of organic waste.
- Upfront subsidy per acre of land through Direct Benefit Transfer instead of providing separate subsidies for fertilisers, electricity, crop insurance etc.
- The Economic Survey 2019 also suggested-
- Use of optimal dose based on soil health status
- Promotion of neem-coated urea
- Promotion of micronutrients
- Promotion of organic fertilizers
- Promotion of water-soluble fertilizer
- Paramparagat Krishi Vikas Yojana (PKVY) and Rashtriya Krishi Vikas Yojana (RKVY) scheme
- Models like Natural Farming, Vedic Farming, Cow Farming, Homa Farming, Zero Budget Natural Farming (ZBNF)