Budget 2024: The state will increase the allocation of organic fertilizers 16 times.

After the 23-24 successfully reduced urea subsidies due to high world prices and increased organic fertilizer allocations by more than 16 times in the fiscal year, focusing on nano diammonium phosphate (nano-DAP) may eventually help the government reduce phosphate fertilizer subsidies. This is also when the debate about the effectiveness of liquid nanofertilizers continues. Finance Minister Nirmala Sitharaman in her budget speech said, “After the successful introduction of nano-urea, the use of nano-DAP will be expanded in various crops in all agro-climatic zones.” 

The minister allocated ₹ 100 crore for promotion of organic fertilizers in FY25 compared to ₹ 6 crore in FY24 (RE). In 2023, a new scheme was launched to promote organic fertilizers by providing Market Development Assistance (MDA) and promoting research and development as GOBARDHAN initiatives. The PM-PRANAM program was also launched last year to provide financial incentives to countries if they reduce the use of chemical fertilizers.

A new beginning. depends on fertilizer because it would increase farm productivity without affecting soil health. In addition to IFFCO, Coromandel International and Zuari received government approval to produce nano-DAP. Claiming that a bottle (500ml) of nano-DAP is equivalent to one bag (50kg) of regular DAP, IFFCO’s price of nano-DAP remained at ₹ 600 per bottle (without subsidy) at ₹ 1,350/bag. (with support) for traditional DAP. Coromandel also sold its nano DAP at around ₹630 a bottle.

“The recent launch of Nano Shakti nano-Urea and Nano Shakti nano-DAP is in line with the government’s focus on promoting sustainable agricultural practices to empower farmers, increase yields and improve soil health for a sustainable and prosperous agricultural sector,” said Madan Pandey, MD, Zuari Farmhub.

“Extending the use of Nano-DAP to all agro-climatic zones will benefit both farmers and the government,” said Pushan Sharma, Research Director, Market Research and Analysis, CRISIL. He said a 500ml bottle of nano-DAP is equivalent to a 50kg bag of regular DAP for a farmer, but costs half the price of a bag. From the government’s point of view, this has the potential to reduce imports and the subsidy.

Helpful step

This (decision to expand nano-DAP) is particularly helpful as India imports 60 percent of its DAP requirement, while DAP accounts for 14-15 percent of the total fertilizer, Sharma said.

Urea subsidy in FY24 revised estimates (RE) reduced from ₹ 1.31 lakh (BE) to ₹ 1.29 lakh. The government has given a subsidy of ₹ 1.19 lakh urea over 25 financial years. On the other hand, the subsidy on phosphate (P) and potassium fertilizers (K) has been increased to ₹ 60,300 to RE against BE 44,000 in the current budget, with an allocation of ₹ 45,000 for FY25.

For the Rabi season 2023-24, the government has fixed the feed-based subsidy scheme at ₹ 20.82/kg for P subsidy and ₹ 2.38/kg for K. DAP imports declined by 12.9 percent to 45.98 liters in April- November 2014 from 52.81 liters a year ago. However, MOP imports increased by 50.8 percent from 11.69 liters to 17.63 liters mainly due to low base effect. The monthly average Free Shipping (FoB) price for urea imported from the Middle East fell to $282 per tonne in July 2023 from $332 in April and rose to $402 in December. The DAP import price (CFR) in India averaged $595 per tonne in December 2023, down from $557 in April.

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