Fertilizer Company Empowers Farmers with Micronutrient Coating, Breaking Free from Government Controls

New Delhi: A leading executive of a major fertiliser company has suggested that the government should lift controls on maximum retail prices (MRP) of fortified urea, Di-Ammonium Phosphate (DAP) and other subsidised commodity fertilisers. The executive believes that these fertilisers can be effectively coated with micronutrients to enhance their effectiveness in delivering secondary nutrients to crops, which farmers are already familiar with using. It is important to recognise the potential of these commodity fertilisers as carrier products for delivering essential nutrients to crops.

The Indian arm of a Norwegian crop nutrition company worth $24.05 billion currently owns a urea plant in Babrala, Uttar Pradesh, which it acquired from Tata Chemicals Ltd for Rs 2,682 crore in 2018. The government regulates the price of urea, a controlled fertilizer, and has set its maximum retail price at Rs 5,628 per tonne. Although DAP is technically decontrolled, subsidy payments to companies covering their higher production or import costs are dependent on them not charging farmers more than Rs 27,000 per tonne.

Due to price controls, companies are currently focusing solely on the distribution of fertilisers and are neglecting marketing efforts. As a result, there is no motivation for these companies to invest in product innovation or technology that can improve nutrient use efficiency in farmers' fields. An effective solution to this issue is allowing urea, DAP or muriate of potash (which contain primary nutrients such as Nitrogen, Phosphorus, and Potassium) to be coated with micronutrients like Zinc, Manganese, Iron, Boron, Copper and Molybdenum, as well as secondary nutrients like Sulphur, Calcium, and Magnesium.

The use of YaraVita Procote can result in an additional yield of 2 quintals per acre, which translates to an extra revenue of Rs 4,120 at the government's purchase price of Rs 2,060/quintal. If the farmer decides not to apply any zinc, the added revenue could even be higher at 6 quintals or Rs 12,360 per acre. Additionally, using YaraVita Procote saves the farmer the cost of applying ZnSO₄ separately.

To allow farmers more flexibility, we advocate for the government to permit free pricing of all micro and secondary nutrient-coated fertilizers. This would enable farmers to choose between using only urea, urea with ZnSO₄, or Zinc-coated urea. The cost of product would only be higher if the benefits of increased crop yield outweigh the extra expenditure.

The current policy permits the fortification of subsidized fertilizers, such as urea and DAP, with Zinc and Boron. However, makers of Zincated urea and Boronated DAP receive only a small additional subsidy of Rs 500 and Rs 300 per tonne, respectively, and are permitted to sell at 10% above the controlled MRPs for non-fortified variants. To simplify matters, the government should set free the MRPs for all coated fertilisers, allowing companies to determine the percentage of fortification by micro and secondary nutrients on their own. Companies could not charge excessive premiums on fortified products since regular urea or DAP would still be sold at heavily subsidised rates.