Raising a stink

Unwarranted ban on urea exports

Fertiliser manufacturers are up in arms against the government. With sound reason. The government, vide a notification dated March 22, had allowed fertiliser manufacturers to export urea produced by utilising capacity in excess of 100 per cent. Accordingly, fertiliser companies had chalked out plans to export urea to neighbouring countries. Now, the government has slapped a blanket ban on urea exports. The ban could have its roots in the fear of a deficit in indigenous production, but ground realities do not bear this concern out. Urea stocks on the ground stand at a comfortable 20.4 lakh tonne — Uttar Pradesh alone has four lakh tonne. For the first six months of the current year, total sale of urea stood at 94 lakh tonne against a cumulative supply of 116 lakh tonne. Earlier this month, the Department of Fertilisers fixed the target of urea production for the next six months at 102.8 lakh tonne and likely imports of one lakh tonne, or an aggregate availability of 124.2 lakh tonne for Rabi 2001. Juxtapose this with actual consumption levels in Rabi 2000 of 96 lakh tonne or in Rabi 1999 of 100 lakh tonne, and one can envisage an exportable surplus after the industry meets requirements under the Essential Commodities Act.

In addition to this, if the government does need to revise upwards its production targets, it can do so. Indeed, the Department of Fertilisers retains the flexibility to prod manufacturers to raise production, as and when required. Producers would have responded without hurting their export efforts. Having dangled the carrot of exports, it is unfortunate that the government has applied the brakes now. It will be very painful for producers to go back on production plans. Indeed, fertiliser majors like the Indo-Gulf Corporation, Tata Chemicals, Iffco, etc will be adversely affected. The government ought to have considered all measures to balance indigenous demand and supply positions before rushing into imposing a blanket ban. Exports should be banned only as a last resort, and that too on a selective basis.