Harmonising South Asia's Food, Fertilizer, and Fuel

The concept of the water energy and food nexus is particularly significant to Asia, which feeds two-thirds of the world's population (4.14 billion people) and consumes 59% of the world's water. Food security and universal access to safe drinking water and modern energy remain critical challenges for Asia's long-term growth. The difficulty is especially acute in the South Asian countries--Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka--where more than 40% of the world's poor live and around 51% of the population is food-energy insufficient.

Illustration by The Geostrata

Limited land availability, insufficient energy, and increasing water stress are not providing sufficient water and energy to feed South Asia’s growing population. The food, water, and energy sectors internally are interconnected and cannot be effectively addressed without cross-sectoral cooperation. With a growing populations, South Asian countries face the collective problem of using the same or less land to produce more food, lower water and energy prices.

Bangladesh, India, Nepal, and Sri Lanka contribute significantly to nitrogen, phosphate, and potash fertilisers. The largest subsidy is found in Sri Lanka (78-83% of global prices), where the three major chemicals (urea, DAP/TSP, and MOP) are sold at the same fixed price of cents 5 per kg In Bangladesh, the price is about four times higher (18-19 cents/kg). Slightly lower than TSP and MOP. However, the price of urea is much lower than DAP and MOP in India and Nepal.

Understanding the issue of fertiliser subsidies requires examining both the demand and supply sides of the market. Since its humble origins in 1906, the Indian fertilizer industry now supplies a significant share of domestic fertilizers.

The Green Revolution of the 1960s led to the expansion of the fertiliser industry. New policies and government in the 1970s helped accelerate that growth. In 2003, India implemented the New Pricing Scheme (NPS) to regulate urea production and distribution.

India is set to spend about 4 trillion rupees ($48 billion) in food and fertilizer subsidies next fiscal year, signalling fiscal restraint ahead of this year's general election.

Food and nutrition subsidies account for nine segments of India’s total budget of Rs 45 billion in the current fiscal year ending March 31. Agriculture has faced challenges in the past despite high growth rates in the Indian economy in other industries.

Judicious use of crops is crucial to enhance agricultural development. Fertilizer use varies by state and farm size changes in fertilizer policy should take into account the current scenario and the need for food security in India. Very little progress was made in the reform process.

Growth in food production has slowed in many parts of South Asia, and per capita food consumption has remained relatively stable, although incomes have risen sharply in recent years and climate change has exacerbated the situation. 

According to the Intergovernmental Panel on Climate Change (IPCC, 2007), crop production in South Asia could fall by up to 30% by 2050 unless practices are changed.

Once abundant water has become scarce. For example, in Pakistan, per capita water availability declined from 5000 sq m per annum in 1951 to 1100 sq m per annum in 2006, and is expected to fall close to 1000 sq m per annum year on year 2010. Water stress is also increasing in India, with per capita water availability in 2005 from 1986 sq m Expected to fall to 1731 sq m and to 1140 sq m by 2050. India is depleting old groundwater 56% faster than it can be restored. Climate change is expected to significantly affect water supplies during the dry season.

About 70% of South Asia’s population relies on biomass for cooking and heating, including fuelwood, crop residues, and animal waste. Incomplete biomass combustion releases small amounts of black carbon aerosols into the atmosphere, which absorb sunlight and give off energy as heat, causing global warming.  When black carbon is deposited on snow and ice, it remains these elements' albedo, heat absorbed upwards, those of the Himalayas They are thought to accelerate the melting of the glaciers.

Despite the challenges, South Asian governments have not been able to stop subsidizing coal.

In the past 30 years, Bangladesh, Nepal, and Sri Lanka all experimented with removing subsidies on coal, only to reintroduce them a few years later for economic and political reasons. Subsidies were also reduced or stopped when world prices fell and reinstated when prices began to rise.

Fertiliser reform must be economically feasible and politically feasible. South Asian governments have repeatedly suspended fertilizer subsidies, which were reinstated a few years later.

Even as their costs increased in India in 2011-12, the consumption of phosphate and potash remained stable. Thus, while the facilitation of fertilisers is important, balanced use of fertilizers may not be sufficient. Farmers need to change their practices and combine appropriate incentives with knowledge. Soil health documentation based on soil testing (SHC) suggests the possibility, however there is limited proof of efficacy.

Similarly, Direct Cash Transfer (DCT) maternity benefits can eliminate distortions, but the Sri Lankan experience indicates that they are more difficult to administer than universal benefits. DCTs seek to eliminate price controls, consolidate land registration and farmer ID cards, implement a universal transfer scheme, and establish competitive retail crops.

Regional integration of upstream and downstream infrastructure is critical for food, water, and energy security.

Within the South Asian Nexus approach, attention should be paid to integrated river system watersheds, basins, and headwaters--as well as boundary communication to exploit the potential benefits of water, hydropower, and other ecosystem projects.

To achieve an efficient marketing strategy and maximize total profits, decision-making processes must be carefully designed and integrated, accounting for the dynamic nature of interactions.  A nexus framework is required to support effective, focused policy instruments that resolve trade-offs while expanding productivity, conserving natural resources, and improving outcomes for the poor.

Here are some policy recommendations:

Water Conservation and Efficiency Program: aimed at conserving and efficiently managing water resources in South Asia. It will include measures such as promoting water-saving technologies, incentivizing rainwater harvesting and groundwater recharge, implementing water pricing mechanisms to reflect the true value of water, and strengthening water governance frameworks.

Sustainable Agriculture Development Plan: a comprehensive plan to promote sustainable agriculture practices such as organic farming, agroforestry, and crop diversification. It will include measures such as providing training and extension services to farmers on sustainable farming techniques, incentivizing the adoption of environmentally friendly practices through subsidies and grants, and integrating climate-smart agriculture principles into agricultural policies and programs.

Renewable Energy Incentive Program: a program to encourage investment in renewable energy projects such as solar, wind, and hydroelectric power. Incentives may include tax credits, subsidies, feed-in tariffs, and grants for renewable energy developers and investors.

Soil Health Management Program: The policy will establish a soil health management program to promote balanced fertilization practices, soil testing, and nutrient management planning among farmers. It will involve providing technical assistance and training to farmers on soil testing methods, nutrient requirements of crops, and appropriate fertilizer application techniques. The policy aims to optimize nutrient use efficiency, reduce fertilizer wastage, and enhance crop yields while preserving soil productivity and environmental sustainability.

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BY GARGI TAMBOLI

TEAM GEOSTRATA

info@thegeostrata.com