Markets are bracing for a possible global food shortage amidst fears that an unpredictable El Nino could see crops drowned by heavy rains in the American mid-west and shrivelled by excessive heat in Australia, South east Asia, India and Africa

As the election process ends today, the public are now looking forward to the declaration of results on 16th May. It is reported that the present United Progressive Alliance (UPA) government may submit its resignation to the President, who will, upon knowing the election results will decide the next step to be taken in inviting the leader of the victorious party to form the government.

In the interim budget, the UPA government had made provision, for the first four months, covering April-July, a sum of Rs28,000 crore as subsidy for urea, both imported and indigenous and decontrolled fertiliser. It appears the subsidy allocated for this purpose is already exhausted and the Finance Ministry have to take a call on for arranging Rs18,000 crore as special banking facility to pay for subsidy dues to fertiliser companies. Presumably, it would depend upon the election results, and they may choose to leave this decision to the new incoming government.

From the media reports it appears that the Fertiliser Ministry feels that the total subsidy may require Rs90,000 crore, including Rs10,000 crore on account of gas price revision for this fiscal. Here again, the decision on gas price itself, which was orginally gazetted on 17^th January, and which could not be implemented, due to the model code of conduct,coming into force, may now rest with the new government. Not a very comfortable situation to be in!

As for the increased cost of subsidy, this is attributed to the change in fixed cost of urea, as the government increased it to Rs350 from Rs200 per tonne. Since there is no revision in the selling price and the difference between the cost and selling price is paid by the government, the subsidy will go up - unless the new government makes its own ruling on the subject.

India's total consumption of Urea alone is about 30 million tonnes (mt), 22mt of which comes from 16 fertilizer units, who obtain gas from Reliance Industries' KG-D6, and the balance of 8mt is imported. According to the Fertiliser Association of India, the total sale of nutrients in 2013-14 amounted to 51.23mt. According to the press reports, Satish Chander, Director General of Fertiliser Association has called for reforms in the industry.

The government decides the cost to end price and he says this sector needs to be decontrolled because of the increase in cost of production. He has contended that the price of feed stock of natural gas in north India is lower than what southern manufactures have to be paid. Delays in release of subsidy has caused trouble and at the same time balanced usage of urea also needs to be implemented. He points out that the maximum retail price (MRP) for urea in India is the lowest in the world at $85, whereas it is $250 in Bangladesh, $350-400 in Pakistan and $350 in China, all without subsidies!

Satish Chander has further charged that urea policy by the government enables increased usage of highly subsidised fertiliser resulting in spoiling of soil health in the country.

The weather conditions continue to cause worry, not only in India but all over the world, due to the uncertainty of the anticipated El Nino strike! The Indian Meterological Department (IMD) still expects the south west monsoon will be lower than normal this year with a 60% probability of El Nino occurance. The government scientists in the US say that El Nino odds may rise to 80% during the "late fall/early winder of this year". But, at the moment, the intensity of this El Nino effect cannot be measured or projected.

As far as the fertiliser companies are concerned, many like the Indian Potash and Zuari have began to confirm orders for supply to meet this year's requirements. Almost 1.6 million tonnes have been contracted, as per press reports.

In a recent article, Prof MS Swaminathan has stated that "the new government must accord priority to both water scarcity and water use efficiency. Water harvesting in homes, farms and factories must become mandatory". Also, he has pointed out that the rain-cum-solar energy centre at Chennai as a source of credible public information on rain water harvesting and solar energy use. Such centres need to be replicated in all our cities, towns and block headquarters"

In Prof Swaminathan's estimation, though we have adequate foodgrain stocks to meet the national food security needs, in case of severe drought conditions, these will only cover 75% of the population and in the event of such a mishap happening, our stocks will be completely wiped out!

In general, "markets are bracing for a possible global food shortage amidst fears that an unpredictable El Nino could see crops drowned by heavy rains in the American mid-west and shrivelled by excessive heat in Australia, South east Asia, India and Africa."

The new government needs to have a very experienced and responsible professional agriculturist in the top of the Ministry of Agriculture to advice the new Minister who will take over this gigantic responsibility.

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)