Sales of Urea and DAP jump by 25% as MOP Complex turn farmers costlier
Even though paddy sowing is lagging behind last year’s level, the use of urea, the major fertilizer for the cereal crop, grew by 25% during the first quarter of the current fiscal as the Government maintains its heavily subsidized sales rate, which has remained unchanged since 2012.
According to government data, Overall fertilizer sales were 142.99 lakh tonnes (lt) between April-June this fiscal, up 21% from 117.98 lt the previous year. Urea sales climbed by 70% to 84.26 lt from 67.45 lt, and di-ammonium phosphate (DAP) sales increased by 70% to 31.76 lt from 18.7 lt. Sales of muriate of potash (MoP) were down 20% at 4.14 lt and complex fertilizer (combination of N, P, K nutrients) were down 14% at 22.83 lt.
The fundamental influence
‘The increase in DAP is primarily due to the base effect, as there was a significant supply shortage last year, despite the government declaring abundant availability.’ However, urea usage shows that farmers are unable to accept the government’s encouraging balanced use of fertilizer because it is not only the cheapest, but there is a big gap between urea and other fertilizers,’ said a former official of the Fertiliser Association of India. He advised that the government explore progressively closing the gap without increasing the subsidy load.
The area under paddy, which was 19% lower until July 22, continues to lag, with the acreage shortfall continuing last week as well. According to the train, the coverage as of July 22 was 170.58 lakh hectares (lh), down from 209.21 lh the previous year.
Because of rising foreign prices, the government’s annual fertilizer subsidy expenditure is expected to be around ₹2.5 lakh crore this fiscal, compared to the Budgetary provision of ₹1,05,222.32 crore for FY23. Due to the increase in world prices, India’s fertilizer subsidy cost jumped to ₹1,40,122.32 crore in Revised Estimates for 2021-22 from ₹79,529.68 crore (Budget Estimate).
Farmers receive urea at a heavily subsidized rate of ₹266 per bag (45 kg) from the Centre. It must bear a subsidy of more than ₹2,700 for each bag. The nitrogen (N) subsidy has been increased to ₹91.96 per kg for the current Kharif season, up from ₹18.78/kg last season. A bag of urea contains 46% nitrogen.
Farmers pay ₹1,350 for DAP and ₹1,700 for MOP (for a 50 kg bag), despite the government increasing phosphorous subsidies to ₹72.74/kg in Kharif 2022 from ₹45.32/kg last year. Potash prices were raised to ₹25.31/kg from ₹10.11/kg.
In the previous two and a half months, the government has uncovered leakages of ₹100 crores in urea sales through various covert operations. Also Read | Fertilizer subsidy of ₹65,000-crore for farmers as Economy booster – FM.
It is anticipated that the yearly need for technical-grade urea for industrial use is roughly 13-14 lt, with the country producing only 1.5 lt. The sector imports barely 2 lt, as opposed to the required level of more than 10 lt, indicating a large-scale diversion of agricultural urea worth over ₹6,000 crores.