Diminishing returns on fertiliser use

Post Source: DAWN Economic and Business Review – 22 Feb, 2010

By Ahmad Fraz Khan 

THE fertiliser policy, especially urea, seems to have entered, what the economists call, “stage of diminishing returns.”
For the last few years, the official urea policy has been two-pronged – flood the local market with imported fertiliser to ensure supply and ensure sale at officially declared price. It, however, ignored a crucial aspect, the “efficiency of fertiliser application.” During these years, the federal and provincial governments tried to use urea import and its marketing for scoring against each other, and never bothered about promoting “efficiency of fertiliser use.” Punjab regularly blamed the centre for shortages, whenever they occurred, and exaggerated potential losses – projecting urea as the only panacea for all the production ills.

The federal government, on its part, responded with huge imports and threw the ball (taking fertiliser to the farmers at officially fixed price) into the province’s court. Punjab resorted to administrative measures to ensure sale at officially declared price.

Nevertheless, official sensitivity to urea availability and price had an un-intended impact; it turned urea into a much sought-after fertiliser and also projected it as the only recipe for increasing crop yield.

Consequently, urea consumption increased, and is still rising without corresponding increase in yield of different crops. No one bothered to check the efficiency of urea application. The consumption figures for the last three years reveal the trend. In 2006-07, the national consumption of urea was around 5.6 million tons. Next year, it touched six million tons and it has gone up to 6.4 million tons this year.

The domestic production of urea is only 4.8 million tons, which might go up to 5.4 million tons as two plants are expected to come online this year. The federal government, however, still has to import one million tons of urea at a cost of $300 million – a staggering amount of Rs25 billion in rupee denomination. Currently, urea costs around $300 per ton in international market. If price rises, the import bill would go up correspondingly.

Though varying increases have been reported in wheat, gram and rice crops at various stages in the last three years, it was largely due to expanding acreage rather than increase in per acre yield because of urea. There are other crops, like sugarcane and cotton, which saw their production sliding despite increasing urea doses as acreage declined.

Thus, the increasing use of urea has not brought the expected results, especially when analysed in the backdrop of huge import. It is because of its highly inefficient use. The government is guilty of focusing on quantitative supplies instead of qualitative use, resulting in massive wastage of fertiliser at the farm level. It is time to include “fertiliser efficiency” in the urea policy.

Scientists all over the world agree that urea is a highly wastage-prone fertiliser because of its composition – its major raw material is natural gas, which either evaporates quickly or leeches down the soil. In order to save it from both eventualities, it has to be buried in the root zone of a crop rather than throwing in open field.

In the Far East, rice growers roll its granules into small mud-pebbles and burry them in the root zone at the time of sowing. The other way is to apply water to the field to make it soft and then throw it with certain force so that it penetrates into the soil.

In Pakistan, both these ways of application are unknown. Farmers here either throw urea in the field increasing the chances of evaporation or apply it with flood irrigation to leech it down. This practice has to be stopped.

Fertilisers have their own protocol – when to apply, how to apply and how much to apply. Unfortunately, local farmers do not bother to check these protocols and waste fertiliser. It is time to arrest the trend.

The government should start looking for ways to increase efficiency of fertiliser application. It is not to argue that the government should leave the farmers at the mercy of greedy private sector but only to underscore that its price-focus neglects fertiliser efficiency.

The single-minded focus has not led to anywhere either. During the last two years, around 2,900 FIRs were lodged against fertiliser dealers and sub-dealers, only to see fertiliser disappearing from the market and becoming even more expensive. Its current price of Rs770 per bag does not make fiscal sense for dealers, leave alone other (unregistered) fertiliser outlets – which have to purchase it from dealers and add their own profit margin. There are around 15,000 unregistered outlets in the province against registered dealers numbering 4,000. The government has no control over these 15,000 shops.

The provincial governments would do better to cast their extension wings into major role of promoting fertiliser efficiency. It should also draw in fertiliser marketing companies and private sector stakeholders. These companies and stakeholders helped Punjab save its cotton crop when it was virtually wiped off by virus. If they can help Punjab achieve the miracle of saving cotton crop, there is no reason why they cannot promote fertiliser efficiency and bring the cost of production down.

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