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Resource centre on India's rural distress
 
 

Fertiliser Crisis a Making of Government's Denial -Suresh Garimella

-Newsclick.in

The roots of the present crisis lie in wrong policies adopted over the last two decades that have undermined domestic production of fertilisers led by the public sector and increased dependence on imports and production by the private sector.

Indian farmers have been facing a major crisis because of shortages in availability and an unprecedented rise in prices of fertilisers. Fertilisers are a critical input for agriculture, and a shortage in supply can significantly undermine national food security. Given this, India's secured supply of fertilisers is a fundamental strategic interest. Although the government has increased subsidies to decrease prices, this has not resolved the immediate problems. Also, it has not taken any serious actions to deal with the structural causes of the ongoing crisis.

The roots of the present crisis lie in wrong policies adopted over the last two decades that have undermined domestic production of fertilisers led by the public sector and increased dependence on imports and production by the private sector. Given that India does not have vital raw materials for producing fertilisers, strategic planning by the government to secure supplies of raw materials and produce fertilisers domestically has played a historic role in supporting India's food security. Over the last two decades, this has been undermined by an increasing reliance on the import of finished fertilisers and the production in the domestic private sector. In pursuit of immediate profits, the domestic private sector has, however, not made adequate long-term strategic investments.

This vulnerability has come to haunt the country in recent months as disruptions in global supply chains have resulted in a sharp increase in the international price of significant fertilisers. The fundamental vulnerability of India's import dependence needs immediate interventions, along with long-term strategies for increasing domestic production.

RISE OF INTERNATIONAL PRICES

The international price of fertilisers has been rising since 2020. The latest data from the Ministry of Chemicals and Fertilisers shows that, within a year (November 2020 - November 2021), the price of a metric tonne (MT) of urea increased by 230% ($280 to $923) of diammonium phosphate (DAP) by 120% ($366 to $804), of ammonia by 224% ($255 to $825), and of muriate of potash (MOP) by 22% ($230 to $280). Within a month, between October and November 2021, urea prices increased by about 25% ($690/MT to $923/MT) and of DAP by 15% ($682/MT to $804/MT).

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