High subsidy again skews fertiliser ratio in the kharif season 2023

Fertiliser subsidies account for 47 per cent of total govt subsidies for FY24

As the world celebrated International Soil Day on Tuesday, heavy subsidies and imbalanced use of fertilisers in India ensured the country’s nitrogen, phosphorus and potassium (NPK) ratio of agriculture soil remained abnormally high at 10.9:4.9:1 in the just-concluded Kharif sowing season, according to data shared by the Fertilizer Association of India (FAI).

The desirable NPK ratio is 4:2:1. The imbalance in the ratio causes problems such as stagnating, soil sickness, widespread deficiency of secondary nutrients and micronutrients, and soil alkalinity and salinity. Eventually, it results in reduced efficiency of fertilisers, low yields and low profitability for farmers. 

The near-ideal NPK ratio was somewhere around 2009-10 when it touched 4:3.2:1. Since then, it has continuously changed, starting from 8.2:3.2:1 in 2012-13.

A big reason for the distortion is the unchanged retail price of urea which makes it the cheapest plant nutrient available to Indian farmers. Urea is almost 46 per cent nitrogen and the commonest form in which nitrogen is applied in soil.

According to the data in the Kharif season (summer-sown season) of 2022, the NPK ratio was 12.8:5.1:1, despite the extensive distribution of soil health cards and multiple programmes to promote the balanced use of fertilisers.

Heavy subsidies coupled with the fixed retail price of urea for over 10 years have led to its imbalanced use, ensuring the current NPK ratio is skewed towards nitrogen. In the 2022-23 financial year, out of the total consumed 64 million tonnes of fertilisers in India, the consumption of urea was around 36 million tonnes (around 56 per cent). Other fertilisers such as Di-Ammonia Phosphate (DAP) was around (16.25 per cent), NPKS (in their various grades) at around 10 million tonnes while Single Super Phosphate (SSP) and Muriate of Potash (MOP) together at somewhere around 6.6 million tonnes.

“It's crucial to spread awareness among farmers about the importance of shifting towards eco-friendly solutions like microbial-based biological fertilisers and fungicides. These alternatives not only maintain soil health but also enhance nutrient efficiency in crops," Harshvardhan Bhagchandka, President, IPL Biologicals Limited said in a note on Soil Day.

Barclays Research, in a note on Indian agriculture, said the potential use of nanofertilisers, a technology that employs micro-nutrients, could reduce fertiliser usage over time, possibly reducing the fiscal subsidies currently provided in the national budget.

It said the fertiliser subsidies that account for almost 47 per cent of total major subsidies provided by the central government (FY24) get complicated by the challenge of fixed fertiliser prices, which have remained unchanged for over a decade.

Within the non-urea fertiliser segment too, the FAI said the downward revision in NBS rates for rabi 2023-24 is affecting the viability of different grades of NPKS and SSP and a continuous decline in the consumption of K (potassium) which helps in mitigating the adverse impact of weather aberrations.

FAI, meanwhile, also pointed out that global prices of Di-ammonium phosphate (DAP) have risen in the last few months and said there will be a need to increase either the government subsidy or retail prices if the rates remain high in the international market.

FAI Chairman N Suresh Krishnan said the global prices of DAP have risen to $595 per tonne from $440 per tonne in July this year. DAP was priced at $924 per tonne in April 2022.