Urea imports fell by 25% in the first half of the current fiscal year, while domestic production climbed by 17%. The benefit of the fall, however, has been offset by increased imports of di-ammonium phosphate (DAP) and complex fertilisers, which, along with high worldwide costs, has resulted in the subsidy level reaching approximately 80% of the budget allocation.
According to the most recent official data, urea imports fell 24.7 percent from a year ago to 29.91 lakh tonne (lt) from 39.7 lt. However, imports of all other fertilisers grew, with complex increasing by 121.5 percent to 15.26 lt, DAP increasing by 43.3 percent to 33.25 lt, and muriate of potash (MOP) increasing by 4.9 percent to 8.83 lt. Overall, imports of all fertilisers increased by 11.6 percent to 87.25 lt.
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NPK sales are declining
‘It is reasonable to observe a decline in imports after domestic urea production increases. However, it is cause for concern given that the import of complicated has more than doubled. In absolute terms, it is more than half the volume of imported urea,’ claimed an industry analyst, adding that NPK sales had plummeted by nearly a fifth.
The main reason for the government-controlled decline in imports is higher output, which reached 139.32 lt on September 30 in the current fiscal year, compared to 119.19 lt a year ago. Though global prices fell to $600/tonne in August from $990 in December 2021, they remain high, having been below $300 until January 2021.
On October 19, the government declared the start of production at the 12.7 lt capacity resurrected urea factory in Barauni (Bihar), bringing the country’s yearly installed capacity to 309 lt.
Sales are skewed
Meanwhile, the urea subsidy was ₹55,198.18 crore in the first half, representing 87.3 percent of the Budget Estimate (BE) of ₹63,222.32 crore, and the DAP and MOP fertiliser subsidies exceeded ₹27,000 crore, representing 64.3 percent of the BE of ₹42,000 crore. The entire fertiliser subsidy from April to September was ₹82,204.74 crore, or 78.1 percent of the total BE 2022-23 subsidy of ₹1,05,222.32 crore.
Agriculture experts say that using more urea and DAP at the expense of complex and potash is bad for crops and that there should be a more balanced use of fertiliser. ‘Cost is clearly a concern, as farmers can acquire urea and DAP at lower prices than complex and MOP. If balanced fertiliser use is to be accomplished, the subsidy program must be adjusted correspondingly,’ said S K Singh, an agriculture scientist.
While the DAP costs about ₹1,350 per bag (of 50 kg), the MOP costs about ₹1,700-1,750 per bag, and the complicated costs about ₹1,500 per bag. Urea is priced at ₹267 per bag. Its pricing has remained unchanged for almost a decade.
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Urea sales climbed by 4% to 172.11 lt, while DAP sales increased by 23% to 51.48 lt, but MOP sales fell by half to 7.08 lt and complex sales fell by 17% to 51.97 lt.
Prime Minister Narendra Modi said on Monday, while unveiling the single ‘Bharat’ brand under the ‘one nation, one fertiliser’ initiative, that the move would help reduce the wasteful consumption of fertiliser. However, experts caution that until costs are rationalised, balanced fertiliser use will not be accomplished.