Urea decontrol to hike cost of production

PATNA: Not the S & P's downgrade of the US credit rating, but the decision of the Group of Ministers (GOM) at the Centre to decontrol the sale of urea on Friday has caused nervous unease among the Bihar agriculture department officials and those who man companies supplying urea for use by farmers in the state.
For, of course, the downgrading of the US credit rating has caused mayhem in the global financial and equity markets, including in India, but it has not affected equities of the Indian fertilizer companies, which, in fact, was high on Monday, because the GOM has also allowed the companies to increase the price of urea by 10 per cent this year itself.
The Bihar farmers, like farmers elsewhere in the country, would have to purchase urea at higher prices from this year's kharif season itself, and the momentum would carry on till the completion of the harvests of rabi crops next year.
"Yes, the immediate result of the GOM decision is that the cost of production of cereals and all other crops would go up. Then, there would be a further demand from, and also persistent clamour by, farmers for increased minimum support price (MSP) for crops," said a Bihar government official, willing to remain anonymous, and added, "At micro level, farmers, starting from this kharif season itself, would begin to learn to adjust to the increased price of urea."
At present, in the state, general urea is sold at Rs 281.50 per bag and neem-coated urea at the rate of Rs 295.63 per bag, as is learnt from the state representatives of manufacturers and suppliers of urea in the state. After accounting for the implied 10 per cent hike in their prices in compliance with the decontrol order, the marked price of general urea would be Rs 309.65 per bag and of the neem-coated urea Rs 325.19. However, the retail market is always afflicted with scarcity, whatever the cropping season, which further jacks up their selling prices. This added increase in the cost that the farmers have to cough up is between Rs 30-50, depending on the area and availability of urea in the market.
Indications are that the state of scarcity would continue to prevail, as against the kharif demand of 9.5 lakh metric tonnes of urea, the Centre has allotted 5.60 lakh metric tonnes, and the shortfall in the supply is to be met by the companies concerned through import and the non-ECA (Essential Commodity Act) reserve urea (that is, the remaining 50 per cent of urea kept in reserve outside that levied by the Centre for distribution under ECA). Similarly, the state's demand for urea during rabi season is 10.5 lakh metric tonnes.
However, both the agriculture department officials and the state representatives of fertilizer companies and suppliers hoped that the Bihar farmers would go for a readjustment, make a substantial cut in the use of urea, and opt for organic or green (traditional) forms of manure.
Already, the chemical inputs that they are adding to the soil in the form of nitrogen (N) from urea, phosphorus (P) from phosphates and potassium (K) from potash is imbalanced. It is 5.8:1.2:1, when it should be in the proportion of 4:2:1.