Scarce fertiliser

When states were assured by the Centre during the recent meeting of the National Development Council (NDC) that their requirement of fertilisers would be fully met, little did they know that this commitment was only for urea and not for phosphatic and potassic fertilisers. Harsh reality has now dawned, for the fertiliser ministry is telling the states that the Centre is not duty-bound to meet their requirement of di-ammonium phosphate (DAP) and muriate of potash (MOP) since these are, technically, de-controlled fertilisers. Consequently, several states are likely to experience a shortage of these fertilisers in the kharif season, which has begun with the onset of the monsoon. DAP scarcity has already surfaced in southern states like Kerala and Tamil Nadu, where monsoon or pre-monsoon rainfall has begun. The Madhya Pradesh chief minister, fearing a similar scarcity, has asked the Prime Minister to intervene and ensure adequate nutrient supplies. Nevertheless, there is every danger of the scarcity getting aggravated once demand picks up in the northern agricultural belt, where crop plantings gather momentum in July. That is partly because the fertiliser industry expects nutrient demand to be 2 per cent to 4 per cent higher than the initial projections, on account of the expectations of a normal monsoon and the good prices received by farmers for their rabi crop, notably for wheat. This would put a further strain on supplies.

The genesis of the fertiliser muddle can be traced to flawed policies over many years. Delays in decisions on prices, subsidies and imports, coupled with under-payment of the subsidy due to the fertiliser industry, have pushed the fertiliser sector to the brink of sickness. As a consequence, while domestic fertiliser output and hence availability are slipping, the industry as well as state government agencies find it difficult to plan for timely imports""which in any case are not easy because of soaring international prices, limited availability in the global market and inadequate port capacity to handle large imports. Last year, when the country imported about 4.7 million tonnes of urea and 2.8 million tonnes of DAP, the ports got choked during the peak landing season. The import requirement this year is reckoned to be still higher, though it is not certain that such huge quantities will actually be imported. What is certain is that farm production will suffer if fertiliser demand remains unmet.

This aside, the mishandling of the fertiliser sector has resulted over a period in the drying up of fresh investment in this industry. Virtually no capacity addition has taken place since 1999, even as capacity utilisation too has dropped. None of this is good news for Indian agriculture. As it is, the consumption of fertiliser in India is lower than even its immediate neighbours like Bangladesh, Pakistan and Sri Lanka. Any further drop will seal the prospect of reversing the deceleration in agricultural production. It is, therefore, time for the government to sit with the industry and chalk out a long-term policy framework which will not only rid this sector of its present ills but also make it attractive enough to attract fresh investments. Farmers' suicides naturally hit the headlines, but the slow choking of the fertiliser industry has got little attention.