Karnataka Fertilizer Subsidies Misuse: Licenses Of 13 Fertilizer Mixing Firms Cancelled

Despite the central government having framed strict regulations to prevent misuse of fertilizers in Karnataka by including them in the list of essential commodities, black marketing and smuggling of fertilizers for non-agricultural activities seems to continue unabated.

It has come to light that subsidised urea and other fertilizers given to farmers are being illegally purchased and used by big private firms for industrial purposes. Fertilizer manufacturing units are also said to be involved in the said racket.

Vijay Simhadri, an official from the agriculture department, told Republic, “Fertilizers are being misused for use as glue for plywood manufacturing establishments, for mixing in animal and poultry food, for adulteration of milk, for enhancing the flavour in cigarettes, for use in hair conditioners, bathroom cleaners, bath oils, lotions by procuring them through smuggling.”

The central government has constituted a fertilizer flying squad (FFS) to curb the illegal trade in fertilizers. The squad has the power to take action against companies and individuals violating the provisions of the Essential Commodities Act, 1955, and the Fertilizer Regulation Act, 1985 (FCO). From April 2022 to August 4, 2023, raids were conducted at 363 fertilizer mixing units across the country.

The licenses of 32 companies have been cancelled for smuggling and supply of substandard fertilizers across India.

In the last 16 months, the flying squad has raided 42 mixing manufacturing units in Karnataka. The licenses of two companies have been cancelled for their alleged involvement in the irregularities and 20 units have been unauthorised by the Integrated Fertilizer Management System (IFMS). Show-cause notices have also been issued to 13 units.

Patil Yalagouda Shivanagouda, Commissioner, Agriculture Department of Karnataka, told Republic, “Strict measures have been taken in the state to check smuggling and black marketing of fertilizers. The licenses of 13 mixing companies have been cancelled after they were found to be misusing fertilizers without following the rules. Some of these companies have approached the court, seeking a stay order on the license cancellation.”

Fertilizer shortage is often created by bringing into effect their artificial scarcity and selling them at a higher price. Sale of neem-mixed subsidised urea is also allegedly carried out by issuing fake Aadhaar cards in the name of farmers. Dealers who sell fertilizers illegally often report to the government that their stocks are empty.

Why are fertilizers smuggled?
A bag of 45kg of neem-coated urea in the market costs around Rs 2,500. Farmers are given the same at a concessional rate of Rs 266. This prompts many to buy urea in the name of farmers and sell it in the black market and use it for other non-agricultural purposes such as adhesive in the plywood industry in liquid form after dissolving it. It is also used as an alternative to protein in animal and poultry food. Urea is also mixed with ragi and paddy straw. It is also used as explosives for mining in industries.