Current Affairs 2024 - Fertilizer Challenge

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India's heavy reliance on fertilizer imports, coupled with recent global conflicts like the Russia-Ukraine war, has highlighted vulnerabilities in its agricultural sector due to supply disruptions and escalating costs.

India, an agrarian economy, is heavily reliant on fertilizers to sustain its agricultural productivity and food security. However, the country's growing dependence on imports and the rising costs of fertilizers due to geopolitical disruptions have exposed critical challenges in ensuring stable agricultural inputs. Addressing these issues is essential to meet the demands of the Indian farming community and to maintain economic and food security.

1. Production-Consumption Gap:
   • In 2021-22, India produced 435.95 lakh metric tonnes (LMT) of fertilizers but consumed 579.67 LMT, highlighting a substantial shortfall.
   • The gap is bridged primarily through imports, making India vulnerable to global price fluctuations.
2. Imbalance in Fertilizer Types:
   • Urea dominates the consumption pattern, with limited adoption of other nutrient-rich fertilizers like NPK (Nitrogen, Phosphorus, and Potassium) or organic options.
3. Fertilizer Subsidies:
   • The government allocated ₹1.79 lakh crore for fertilizer subsidies in 2023-24 to shield farmers from soaring costs, reflecting the heavy fiscal burden on public finances.
4. Dependence on Imports:
   • Over 50% of fertilizers like diammonium phosphate (DAP) and potash are imported, increasing reliance on international suppliers.
5. Rising Demand Due to Crop Patterns:
   • With India’s agricultural sector intensifying production to meet domestic and export demands, fertilizer usage is expected to grow, widening the demand-supply gap.

1. Rising Costs Due to Oil Prices:
   • The conflict increased crude oil prices, directly impacting petroleum-based fertilizers like urea, pushing up costs for Indian farmers.
2. Disrupted Import Chains:
   • Russia and Ukraine are key suppliers of fertilizers. Supply disruptions have led to increased import prices and potential shortages in India.
3. Higher Subsidy Burden:
   • Elevated fertilizer costs due to import reliance have strained India’s budget, requiring a higher subsidy allocation and diverting funds from other development sectors.
4. Agricultural Vulnerability:
   • Fertilizer shortages during critical sowing seasons like rabi can impact crop yields, threatening food security in key wheat-growing states.
5. Ripple Effect on Global Markets:
   • Geopolitical instability has made fertilizers a strategic commodity, with nations competing for limited supplies, further escalating prices for importing countries like India.

1. Boost Domestic Fertilizer Production:
   • Establish more gas-based Greenfield units and modernize existing fertilizer plants to increase domestic output and reduce reliance on imports.
2. Promote Nano Urea and Sustainable Practices:
   • Nano urea, a concentrated liquid form, can minimize wastage and improve efficiency. Encouraging natural farming practices reduces dependency on synthetic fertilizers.
3. Encourage Investment in Fertilizer Sector:
   • Create an investment-friendly policy framework to attract public, private, and cooperative sector participation in fertilizer manufacturing.
4. Expand and Revive Urea Plants:
   • Recently revived plants like those in Gorakhpur and Ramagundam should enhance capacity utilization to meet domestic demand effectively.
5. Diversify Imports and Develop Strategic Partnerships:
   • Partner with alternative suppliers to reduce dependency on a few countries and negotiate long-term supply contracts to stabilize import costs.

Conclusion

India’s fertilizer sector faces critical challenges due to its reliance on imports, fiscal burdens from subsidies, and global disruptions. To safeguard agricultural productivity and food security, it is imperative to enhance domestic fertilizer production, adopt innovative technologies like nano urea, and promote sustainable farming practices. By fostering investments and diversifying import strategies, India can build a resilient fertilizer ecosystem to support its agrarian economy.

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