June 25, 2012

India to raise fertiliser subsidy twofold



India seeks to double fertiliser subsidies for the next fiscal year.


The Ministry of Agriculture and Development is holding discussions to increase fertiliser subsidy to INR5 billion (US$0.09 billion) for the next fiscal year from the current INR2.83 billion (US$0.05 billion), according to ministry sources.


The ministry's plan comes amid increasing agitation by farmers against the government inability to supply adequate fertilisers in current paddy plantation season. Farmers across the country are reeling under with fertiliser shortage.


According to a ministry source, the increase in the subsidy will allow the Agriculture Input Company, a government entity that imports and distributes fertiliser, to procure 300,000 tonnes manure for the next fiscal year from the current 150,000 tonnes.


AIC, which has run out of fertiliser stock, on Wednesday (June 20) said 12,500 tonnes of urea would arrive in the country by next Tuesday from India. The government has already paid for the order. "We are in the process for the price negotiation of Diammonium Phosphate (DAP) with the Indian supplier," said AIC Managing Director Sashi Raj Tuladhar.


AIC has been able to supply only 20% of the country's fertiliser demand. Illegally imported fertilisers from India make up the rest.


Agro experts say the delay in delivering fertilisers coupled with late monsoon will hit the country food's production. Agro expert Hari Krishna Upadhyaya predicted that corn production will be affected the most. Paddy plantation has not much been affected in Tarai, he said, adding that corn cultivated areas have been hit hard due to late monsoon and unavailability of fertilisers.


"It is difficult to forecast to what degree these two factors will have their adverse effect on production. Based on the current scenario, it can be assumed that monsoon crops could drop by around 10%," Upadhyaya said.


According to government officials, fertiliser shortage this year has become more severe as India has tightened security, particularly to prevent smuggling. In Nepal, private companies do not deal in fertilisers due to high cost and risk factor.


In Nepal, 80% farm output comes from crops sown during the June-September period. Given a timely monsoon and availability of fertilisers, Nepal is expected to record an all-time high production of food grain of over 9.457 million tonnes in fiscal 2011-12. Of the total food grains production, 7.576 million tonnes output comes from crops during the June-September period.