More use of speciality fertilisers can help tide over supply shocks: Experts

As India grapples with a surging fertiliser subsidy bill, experts highlight the growing farmer appetite for non-subsidised speciality fertilisers, which offer a more resilient supply chain and potential for enhanced agricultural productivity.

As the government grapples with rising fertiliser subsidy in the wake of the West Asia crisis, experts gathered at a discussion in New Delhi on Thursday said that rising sales of non-subsidised speciality fertilisers at around 10-12 per cent per annum show that farmers have an appetite for good products irrespective of the price charged.

Also, non-subsidised speciality fertilisers have a much more diverse sourcing range than that of urea, DAP (diammonium phosphate) and others, and hence are relatively insulated from global supply shocks like the ones currently happening due to the West Asia situation.

Global Supply Shocks and Price Hikes

The supply shocks have pushed global urea rates to almost $800 per tonne from the pre-war levels of less than $450 per tonne, while DAP prices have also crossed $800 per tonne from around $650-670 per tonne before the war.

"Most speciality or non-subsidised fertilisers are sourced from Europe, China, Taiwan, and the Middle East.

"Also, their transportation is not difficult as they pack more punch than conventional urea, DAP, and NPK (nitrogen, phosphorus, and potassium), and are required in lesser quantities.

"Therefore, they can be an ideal replacement for traditional products," said Sanjeev Kanwar, managing director of Yara International South-Asia.

In India, speciality fertiliser sales have been growing at the rate of 10-12 per cent per annum.

Though their total sales volume is quite small at around 0.4-0.5 million tonnes (mt) compared to over 65 mt of subsidised fertilisers sold in India every year, the volume rise shows that niche products that give better value for money do command a market, experts said.

Reimagining the Future of Farming

Yara had organised a panel discussion on "India's Agri GDP 2X Journey: Reimagining the Future of Farming" at the Royal Norwegian Embassy to commemorate 15 years of its presence in India.

"One 50 kg bag of urea sells at around Rs 270, while a bag of calcium nitrate of the same weight sells for around Rs 3000, which shows the huge price difference between the two products but despite that farmers are adopting them," Kanwar said.

David Fiacco, senior partner at McKinsey and Co, said that geopolitical tensions and disruptions show that doubling agriculture productivity by 2050 can only come through new micro-nutrient solutions and by developing end-to-end input packages.

Regulatory Challenges and Innovation

S K Chaudhuri, director general of the Fertiliser Association of India (FAI), said the country has long focussed on quantity in agriculture but the time has now come to produce good quality products, which will come from using innovation in fertilisers that require less application but are more efficient.

Sanjay Chhabra, executive director (ED) and business head of DCM, said that regulatory bottlenecks prohibit quick development and early deployment of new products.

He said the entire regulatory system in India assumes that the farmer is poor and people are bent on cheating him.

He also called for changes in the Fertiliser Control Order.

Ajay Rana, managing director (MD) of Savannah Seeds, said one of the greatest transformations in Indian farming over the last decade has been in maize, where production growth has jumped ever since the regulator started giving protection to developers of single-cross corn.

Nikita Nathani, also partner in McKinsey and Co, said that the aggregator model in the form of FPOs (farmer producer organisations) is a good model to adopt but its functionality needs to be checked.