Nano fertilisers not just promise to cut down subsidy burden but also improve the income of farmers 

Inaugurating function of the two-day “Kisan Samman Sammelan” at the Indian Agricultural Research Institute (IARI) on October 17, Prime Minister Narendra Modi announced two major policy initiatives -- “One Nation, One Fertiliser” scheme under which all fertiliser manufacturing and market companies will sell all subsidized fertilisers under a single brand Bharat; and promote use of liquid nano fertilisers.

While the government intends to use “One Nation, One Fertiliser” scheme to reduce the criss-cross movement of fertilizers that will eventually help reduce freight subsidy bills and make quality fertilizer available at lower cost, adoption of liquid nano urea is meant to help attain self-sufficiency and help farmers enhance their income, besides ensuring minimal impact on the environment.

The Centre controls the maximum retail price (MRP) of urea, at a low level unrelated to the cost of production, which is higher. The excess of cost over MRP is reimbursed to the manufacturer as a subsidy, which varies from unit to unit depending on its cost. The movement and distribution of urea is also controlled under the Fertilizer (Movement) Control Order, 1973. The cost of transportation from the plant/port up to the retailer is reimbursed under a uniform freight policy.

For non-urea fertilizers, the government fixes ‘uniform’ subsidies on a per nutrient basis for all manufacturers and importers. They must deduct the subsidy amount from the cost while fixing MRP. Although they are free to move and distribute these fertilizers, 20 per cent of the material is under movement control to service under-served areas. They get reimbursement for freight cost for movement by rail.

The requirement of all fertilizers for each cropping season i.e. kharif (April to September) and rabi (October to March) is assessed by the Department of Agriculture and Cooperation (DoAC) in consultation with Department of Fertilizers (DoF), states, railways and fertilizer manufacturers. It is broken down month-wise.

The movement and distribution of all fertilizers is monitored through the online web based “Fertilizer Monitoring System (FMS). When a decision on who will supply urea (or any other fertilizer), how much quantity and where is taken by the government in consultation with all stakeholders, including the manufacturers and even the movement is tracked on real time basis, it is naïve to believe that there would be criss-cross movement.

It is hard to fathom how asking all suppliers to sell fertilizer under one brand will help in eliminating criss-cross movement, if any. At the same time, by rendering individual company brands redundant, it will penalize firms which have invested heavily in building brands in a territory which could face a free for all.

The idea of a uniform pan-India brand may have been prompted by the fact that fertilizer products have fixed nutrient content as specified under the Fertilizer Control Order (FCO); for instance, urea has 46 per cent ‘N’. But, this is a fact known for ages; it doesn’t take away from the fact that a brand testifies to the quality of the product and the whole package of support services offered by the firm.

Modi referred to the practice of higher margin offered by some manufacturers to retailers for pushing their brand. Under the existing dispensation, the government allows a uniform distribution margin which gets covered under subsidy. Any amount higher than this is not permissible. There is no way a Bharat brand can help reining in such violations.

As for the second initiative, nano urea is urea in the form of a nanoparticle containing nitrogen particles of 20 – 50 nanometer size. Soil nutrient in liquid form provides nitrogen to plants as an alternative to conventional urea. A 500 ml bottle of nano urea is equivalent to a 45 kg bag of conventional urea.

The efficiency of nano urea is more than 80 per cent as compared to around 40 per cent of conventional urea. Nano bottles are easily portable. It increases yield by 3-16 per cent and additional income for farmers is estimated around Rs 2400/- to 5700/- per acre. Its use causes less soil, water and air pollution.

Will this technology deliver? On a close look, some grey areas catch attention. First, normally urea is applied in two dosages: one, basal application being even spreading of solid fertilizers over the entire field before or at sowing or planting; two, top dressing which involves applying fertilizer directly to the leaves as opposed to in the soil. Nano urea is meant to replace conventional urea only in top dressing even as basal application is entirely in solid form.

This means that the benefit of 80 per cent efficiency (albeit of nano urea) will be available to only just 50 per cent of the total quantity of fertilizer applied. Hence, the effective efficiency achievable would be 60 per cent (80x0.5 + 40x0.5). In other words, the efficiency gain with use of nano urea would be 20 per cent more instead of 40 per cent higher as revealed by a plain reading of numbers.

Second, the increase in yield with use of nano urea is reported to be in the range of 3-16 per cent. The higher end of the range may look impressive, what if the farmer gets stuck with the lower end? An increase of 3 per cent in yield doesn’t take us very far.

Third, the most crucial factor is cost and price to the farmer. While the cost of importing 45 kg of conventional urea is Rs 3000/-, the price to the farmer is Rs 242/- the difference being made up by subsidy from the Centre. For nano urea, even as the farmer pays more or less the same i.e. Rs 240/- for 500 ml bottle, the producer doesn’t get any subsidy support.

Naturally, he won’t be selling at a loss. In other words, the cost of the bottle would be around Rs 240/- only. This may sound puzzling when one considers that the basic material for making nano urea is none other than conventional urea (nano urea contains by weight 85 to 99.98 per cent of conventional urea, 0.01 to 5 per cent of quinhydrone, 0.01 to 10 per cent of calcium cyanamide besides micro non-nitrogen plant nutrients and micro nitrogen containing compounds). The puzzle is solved the moment one looks at the following.

Whereas a 45 kg bag of conventional urea contains 46 per cent ‘N’ or 20 kg (45x0.46), 500 ml bottle of nano urea has 4 per cent ‘N’ or 20 grams (500x.04). The latter with a mere 20 grams can achieve what the former does with 20 kilograms. It is for agricultural scientists to authenticate whether nano urea can accomplish such a feat. If it can, the government can save a whopping about Rs 55,000 crore in subsidy annually on 9 million ton of urea import [(2758x22.22x9); 2758/- (3000-242) is subsidy per 45 kg bag, 22.22 number of bags in a ton] that will be replaced by 198 million bottles of nano urea requiring no subsidy.

(The author is a policy analyst)