Asymmetry in Fertilizer 

Why in the news 

In early 2022, prices were nearly twice what they are now. The demand for food and plant nutrients rose right after the lifting of COVID lockdowns. 

Why have the prices risen?

• Fertilizers are very important for the well-balanced growth of plants because they provide eight micronutrients and six macronutrients. 
• The "landed price" (the cost of the product, which includes all the expenses associated with the shipment) of DAP (di-ammonium phosphate, a type of fertilizer that is commonly used in India) and its raw materials, including ammonia, phosphoric acid, rock phosphate, and sulfuric acid, have now decreased by more than half in price. 
• DAP is the second-most preferable fertilizer. It is used mainly before or during planting to stimulate the roots and help them grow, as it contains phosphorus. 
• Only the prices of MOP (muriate of potash) have remained high since the start of the war because Russia and Belarus, its allies, roughly produce and export 40% of the global share. 

What were the reasons? '

• The prices doubled mainly because of two reasons- 
• the Russia-Ukraine war and
• Logistic issues due to Covid-19
• The FPI (Food Price Index) hit an all-time high of 159.7 points in March, but later the value went down for nine consecutive months. It was because both the global price of fertilizers and world food prices cooled. 

FPI is a measure that calculates the weighted average of the international basket of food commodities with the base year of 2014–16 and a base value of 100. 

What opportunities are now available?

• The availability of fertilizer has improved. 
• There is no fertilizer shortage except MOP, which was only noticed during the Rabi crop season. 
• For Kharif 2022 and Rabi 2021–22, the MOP was available when prices soared, and disruptions made it difficult for the companies to import fertilizers and inputs. 
• Even during that time, augmented fertilizers were available, and the soil moisture conditions were good, so both of them helped in sowing the rabi crops such as wheat, mustard, maize, and masuri. 
• The cooling of the prices will translate into the reduction of the subsidies for fertilizers. 
• It is expected that there will be no supply shocks as of now. The government plans to keep retail prices from rising in the year that there will be national elections. 

What are the challenges?

• Imbalanced fertilization
• In 2010 the UPA government introduced a new regime, NBS (nutrient-based subsidy), to discourage the farmers from using too much urea, DAP, and MOP because they contain a large amount of nitrogen and potassium. 
• The government fixed the per kg NBS rate for nitrogen (N), phosphorus (P), potassium (K), and sulphur (S). 
• This new regime was started to promote balanced fertilization by using more complex fertilizers with less concentration of N, P, K, and S. 
• From 2015-16, the Modi government made it compulsory to coat neem oil with urea. Neem oil is a mild nitrification inhibitor that allows the gradual release of nitrogen.  
• To check illegal diversion of heavily subsidized fertilizer which is used for non-agriculture. 
• The NBS initially substituted the DAP and MOP with SSP, and NPKS complexes and urea consumption also fell. 

What were the applications?

• The changes that happened by NBS have been reversed in recent years. Urea consumption has also gone up. The SSP and NPKS complexes consumption increased mainly due to the shortage of the DAP and MOP. 
•  The recent fiscal data shows that nutrient imbalances have worsened. 
• The sale of urea and DAP has risen while the sales of SSP and MOP have fallen. 
• Urea is the cheapest fertilizer in the country. The non-urea fertilizers like DAP and MOP.
• Under the NBS
• the prices of non-urea fertilizers were not controlled. 
• While the current government has restored the prices and fixed the NBS rates.

Way forward

• The industry experts talked about the DAP and said that two things need to be done to prevent it from becoming the next urea-
• To restrict the DAP use of rice and wheat, all other crops can use SSP and complexes to meet their P requirements.
• Raise SSP by allowing its sale only in a granular form, not in powdered form. The reason is that granules promote a slower release of P, while the powdered form is prone to adulteration. 
• The focus should be on putting a cap on urea, DAP, and MOP consumption.
• Farmers should use more complex fertilizers and SSP.