Rationalising prices

Excess use of urea should be contained

The Commission for Agricultural Costs and Prices (CACP) recently recommended that urea, the fertiliser consumed most, should be brought under the nutrient-based subsidy (NBS) regime, like all other fertilisers. The objective, clearly, is to foster parity in the prices of fertilisers containing nitrogen (N), phosphorus (P), potassium (K), and other plant nutrients, to ensure their balanced and need-based application. The unduly low price of urea, vis-a-vis other fertilisers, has resulted in overuse of nitrogen and inadequate application of other equally essential nutrients, including some vital micro and secondary plant nutrients. Soil health, as also its fertility, has consequently been adversely affected. Higher doses of nutrients are now required to get the same level of crop yields. Continuing this situation would bode ill for farming, particularly profitability, which has already been severely eroded.

The CACP’s counsel on urea is, indeed, neither new nor unique. Farm scientists have been pleading for it ever since the well-founded mechanism of NBS was conceptualised in 2010 as a means of rationalising fertiliser subsidies. However, the United Progressive Alliance government chose to disregard it because urea pricing is a politically sensitive issue. As a result, fertiliser subsidies continued to soar to touch a high of nearly Rs. 2.3 trillion in 2022-23. Also, while the consumption of urea spurted since then, by over 33 per cent, that of other fertilisers registered only marginal gains. The imbalance in nutrient use worsened further, to the detriment of soil health. Since the present National Democratic Alliance government also faces a similar dilemma — the general elections being due next year — it would do well to at least implement the politically less inconvenient suggestion of this policy advisory body to put a cap on the number of bags of subsidised urea a farmer can buy. Besides, it is easily doable, given that subsidised fertiliser sales are done through digital devices installed at retail shops and the buyer’s identity is ascertained through Aadhaar or other identification documents.

The government is not wholly unaware of the adverse implications of the unabated imbalance in nutrient use. Nor can it be accused of taking no remedial action. Initiatives like mandatory neem-coating of urea, and the introduction of soil health cards, which are renewed every couple of years, were intended primarily to promote judicious use of plant nutrients. But these measures have failed to produce the desired results. The latest estimates reckon the NPK use ratio at 13:5:1, instead of the ideal 4:2:1. Rationalising prices, therefore, seems the best way to restore the nutrient-use balance for the sake of sustainable agriculture.

This, moreover, is the most appropriate time to carry forward pricing reforms in the fertiliser sector. The domestic production of urea has begun to look up, and the need for imports is waning rapidly, thanks to the re-commissioning of three defunct fertiliser plants and the availability of innovative Nano urea, which does not require any subsidy. Besides, the international prices of fertilisers have also eased from their peaks touched immediately after the beginning of the Russia-Ukraine conflict in February 2022. The government thus should take this opportunity to rationalise fertiliser prices, as advised by the CACP.