The fertiliser prices, then, will be market-determined, ensuring their efficient usage, and stopping their diversion to non-agri uses as well as to neighbouring countries.
The Narendra Modi government completed the first 100 days of its second term (Modi 2.0) last week. Most Cabinet ministers showcased what new and bold things they have done in their respective ministries. Media headlines, however, were filled with either the abrogation of Article 370, and its fall out, or the biggest ever slump in auto sales in the last two decades, or the slowing down of GDP growth to 5%. I was searching for any bold moves in agriculture as it affects the largest number of people. Frankly, I didn’t find one. Surely, some tweaks in already-announced schemes, or some new ideas were thrown in, but without much backing of science, or resources. Let me pick a few of them for deeper dive.
PM-Kisan, promising Rs 6,000/year to each farm family, was announced before the Parliamentary elections. In the 100 days of Modi 2.0, it was extended to all farming families. The 2019-20 Union budget has provisioned Rs 75,000 crore for this. This is the first step towards direct cash (income) transfer to farmers’ accounts. As I have argued earlier in this newspaper, this will be meaningful if other subsidies, such as those on food and fertiliser, power, irrigation, agri-credit, etc, are also clubbed with this and given directly to farmers, and then allowing the prices to be set by market forces. Else, it may be at the cost of investments in agriculture, which have already fallen from a peak of 18.2% of agri-GDP in 2011-12 to 13.7% in 2017-18. With such a fall in investments, the dream of doubling farmers’ incomes by 2022 cannot be fulfilled.
But, here, I want to focus on something new and interesting that the prime minister talked of in his Independence Day speech, and later repeated in his address to the UN 14th Conference of Parties (COP14), in Greater Noida. The PM’s key message was to reduce consumption of chemical fertilisers, and promote what is called Zero Budget Natural Farming (ZBNF). The ZBNF, fathered by Subhash Palekar, uses dung from desi black cows, their urine, adds jaggery and pulses flour in certain proportions, and uses that as jeevamrit to augment microbial activity in the soil. This is supposed to make our soils healthier, and augment productivity in a sustainable manner. Incidentally, ZBNF was also mentioned as the future of Indian agriculture by Nirmala Sitharaman in her maiden budget speech.
At the very outset, let me say that I am a supporter of adding any organic matter, be it dung, or farm yard manure (FYM), that can improve carbon in our soils. It is well-known that chemical fertilisers have not been used very rationally by our farmers. Although the optimal ratio of using nitrogen (N), phosphate (P), and potash (K), differs from plot to plot, at an all-India level, it is generally agreed that the optimal combination of N, P, and K should be in the ratio of 4:2:1. In 2009-10, this NPK ratio was 4.3:2:1, quite close to the desired level. But, in 2010, the policy of Nutrient Based Subsidy (NBS) was introduced, whereby prices of P and K were almost freed, with some fixed subsidy on per tonne basis, but N (urea) was excluded from this scheme. As a result, while DAP and MOP carry a subsidy of about 25-30% of their costs of production, urea has a subsidy of more than 75% on its cost of production. Indian urea prices are perhaps the lowest in the world, and certainly lowest amongst major countries (see graphic).
No wonder, there is overuse of urea in relation to DAP and MOP. Normally, whenever chemical fertilisers are used, it is recommended to also use a good dosage of farm yard manure (FYM). So, FYM or jeevamrit-type stuff is conceived as a supplement to, not as a substitute of, chemical fertilisers.
But, if the government wants to replace chemical fertilisers—the PM said in his “Mann ki Baat” of November 26, 2017, that he would like to halve fertiliser consumption by 2022—then it raises serious questions. First, has the scientific body of the government, the Indian Council of Agriculture Research (ICAR), studied the possible impact of ZBNF on yields of major crops, like wheat and rice, in comparison to chemical fertiliser-based farming? It needs to do large-scale testing in different regions to see the nationwide implications of ZBNF on overall production of major crops. I understand this has not been done yet, and the limited information available suggests a drop in yields from 30-50%! If so, it can puncture a big hole in India’s food security basket. Do we want to go back to the ‘ship-to-mouth’ situation of the mid-1960s?
Second, if the PM wants to cut fertiliser consumption by half by 2022, why is the government investing in new urea plants under public sector—Gorakhpur (UP), Barauni (Bihar), Ramagundam (AP), Sindri (Jharkahnd) and Talcher (Odisha)—of 1.27 million tonnes each. Together, this amounts to 6.35 million tonnes, the production cost of which, is likely to be above $400/tonne. One wonders whether there is any coordination between what the PM speaks, and what his government is doing? It seems a typical case of the left hand not knowing what the right hand is doing.
My humble submission is that the fertiliser subsidy, which is budgeted at Rs 80,000 crores for the 2019-20 budget, be given directly to farmers on a per hectare basis, and let them decide whether they want to opt for ZBNF, or chemical fertiliser based farming. The fertiliser prices, then, will be market-determined, ensuring their efficient usage, and stopping their diversion to non-agri uses as well as to neighbouring countries. It will be a win-win situation. Can the Modi government do it in the next 100 days?