Indian farmers in stress as increased prices create fertilizer black market

The shortage has led to a going market where subsidized nutrients of crops are sold illegally at much higher prices than prices that were set by the government.

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Indian farmers in stress as increased prices create fertilizer black market

Indian farmers are stressed by an increased shortage of fertilizers that are going to the black market and paying excessive prices for their supplies.

The shortage has led to a going market where subsidized nutrients of crops are sold illegally at much higher prices than prices that were set by the government. dubious agents have been busy getting requests from farmers who enquire them in desperate need.

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Farmers state that they do not have much of a choice with a key planting season which is a way for the nation’s millions of households that are totally dependent on agriculture for living.

“We either have to cut the use of fertilizers and risk lower production, or pay sky-high prices on the black market”, stated by Dilip Patidar who is a wheat and onion grower in the state of Madhya Pradesh is.

Either option is not too great. A drop in crop yields could increase food prices, making inflation worse in a nation where 15% of the population faces hunger. Paying great prices on the black market will damage the incomes of small and marginal farmers that make up to more than 80% of the nation’s agricultural sector.

India is one of the worst affected nations by a worldwide crisis of fertilizer. The prices of crop nutrients have raised high as tight coal and natural gas supplies forced several fertilizer plants in Europe to close. China and Russia have even restrained exports to safeguard their domestic supply. These obstacles will keep fertilizer prices raised through the first half of 2022, according to Gro Intelligence.

India imports up to a 3rd of its fertilizers and is the biggest buyer globally of urea and di-ammonium phosphate, referred as DAP.

The crunch in supply will certainly hurt production of staple crops like wheat, rapeseed and pulses planted during the winter season.

“The shortage of fertilizers comes at a time when the prices of other inputs like diesel are also elevated and some farmers have suffered damage due to erratic rainfall,” said Garima Kapoor who is an economist at Elara Securities (India) Pvt. Ltd. in Mumbai. “These may limit the recovery in rural demand”, she added.

India is boosting its fertilizer production and is working on deals that are long terms with suppliers to restrain price increases, according to people familiar with the matter. Latest subsidies to fertilizer companies are sufficient enough but if required, the Centre will allow it, stated by the people, who seemed not to be named as they are not authorized to discuss over policy.

“The federal government has started making weekly allocation of fertilizers to districts based on demand to prevent hoarding by retailers and farmers amid low stockpiles, one of the people said. Talks are ongoing with countries such as Oman, Jordan, Morocco and Russia for long-term supplies”, the person stated.

Economic Affairs Secretary Ajay Seth has decided not to comment on whether the Centre shall further increase fertilizer subsidies. A spokeswoman for the fertilizer ministry was not available for any sort of comments.

“On the black market, a 45-kilogram bag of di-ammonium phosphate is selling for 1,500 rupees ($20), above the maximum retail price of 1,200 rupees”, farmer Patidar stated. A bag of urea costs almost more than 400 rupees as compared with the actual price of 266 rupees.

Patidar is eagerly waiting for his fertilizer stocks to reach. “If I don’t get adequate supplies on time my output will fall,” he stated.

Another farmer from India’s northern state of Haryana is as well facing fertilizer woes. Sukram Pal stated that he managed to sow wheat by utilizing half the usual amount of DAP, but now needs urea which is certainly in short supply. “Production is definitely going to fall this year,” he stated.

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Indian farmers in stress as increased prices create fertilizer black market
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The shortage has led to a going market where subsidized nutrients of crops are sold illegally at much higher prices than prices that were set by the government.
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THE POLICY TIMES
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