PM Modi has requested farmers to cut urea consumption by half in the next 5 years.
What is the basis?
To drive the point for urea reduction, the PM cited ‘Hamirpur district in Himachal Pradesh’ where farmers had reduced urea consumption.
Apparently, this had increased wheat productivity by three times and increased their income by Rs 5000-6000 per acre.
While this is indeed optimistic, the question of whether scaling up is possible at an all-India level by 2022 remains.
What is the anomaly?
India is currently an important urea market with consumption of about 30 million tonnes (mt) of urea annually, of which about 24.5 mt is domestically produced.
Notably, the government itself is trying to increase urea production by about 5.2 mt by reviving four of its dormant urea plants.
Given this, the call for reducing urea consumption, had raised concerns in the fertilizer industry.
What are the concerns?
Prices - Urea prices in India are perhaps the lowest in the world, with most countries in the neighobourhood having 2-3 times higher prices than India.
Extremely low prices of urea lead to its diversion for non-agricultural uses as well as smuggling to neighbouring countries.
Dosage - There is a practise among farmers of using higher doses of urea (nitrogen) than the recommended level.
This leads to the lack of sufficient phosphate and potash in the soil, which is subsequently affecting the yields.
Deficiency - There is a massive deficiency of micro-nutrients like zinc, which is leading to zinc deficiency in wheat and rice, contributing to child stunting.
As all of these need urgent correction, the call for slash urea consumption by half, needs serious thought.
What are the government efforts?
While there is an overall increase in consumption, in the last five-six years, urea consumption on per hectare basis has stagnated in India.
These trends are probably due to some government measures and other factors.
SHC – ‘Soil Health Card’ Scheme provides for guidelines on nutrients use in the soil.
NCU – ‘Neem Coated Urea’ policy began in 2008; when initially 20% of urea produced was to be neem-coated, since 2015, 100% neem coated urea was mandated.
The concept is that NCU can improve nitrogen-use efficiency (NUE) by about 10% by slowing the release of nitrogen.
SHC Scheme and NCU policy are already working for reducing urea consumption.
If implemented comprehensively, this can help further rationalise the use.
What is the way forward?
The pricing policy for urea continues to remain highly subsidised.
This makes it difficult to achieve any significant reduction in urea consumption.
There are talks for ‘Direct Benefit Transfer’ (DBT) for fertilizer subsidies.
If DBT is implemented, market forces would decide fertilizer prices.
Consequently, this would encourage the industry to innovate and also eliminate all diversions to non-agri-uses and cross-border smuggling.
This will also incentivise farmers to use fertilizers in appropriate ratios.
