Sulphur wins nutrient battle

On February 18th the Indian cabinet approved a historic decision to change the country’s system of fertilizer subsidies. From April 1st this year, India will pay a per tonne nutrient-based subsidy on price-decontrolled fertilizers. This affects all of the major fertilizers used in India; mono- and di-ammonium phosphate, urea, triple superphosphate, ammonium sulphate, potassium chloride (‘MOP’), and 12 grades of NPK complex fertilizers. Interestingly, for the first time sulphur is considered to be a primary nutrient and will be subsidised accordingly - the first time that it has ever achieved such formal recognition.
The move aims to correct serious issues with the present system. During the 1960s and 70s, India underwent its so-called ‘green revolution’, when yields from rice and other food production tripled. In the second half of the 20th century India went from being a country that had imported food aid from the United States to being self-sufficient in agriculture even during a time when its population ballooned from 450 million to its present 1.2 billion. India’s agricultural self-sufficiency was in no small part driven by a system of fertilizer subsidy that made fertilizers cheap enough for farmers to afford them. Rather than give the money to farmers, the subsidy system instead paid fertilizer producers to supply them at a certain price, building in a minimum return on investment. As a result, there was a massive boom in production of fertilizers, particularly ammonia and urea.
Unfortunately the plan became a victim of its own success. The bill for subsidy kept climbing, from $640 million to $20 billion, at which point it was starting to consume a major part of Indian government revenues. The problem was that the plants had been built on whatever feedstock was available; some of them based on natural gas, but most on naphtha from oil refining. By the 1990s prices for both were high in India as the fertilizer industry had to compete with other users, in particular natural gas for power production.
India’s shortage of domestic phosphate and potash meant that it also had to import those, often at considerable expense but the subsidy scheme remained skewed towards nitrogen production, particularly urea, and prices for phosphorus and potash were higher. The upshot was that farmers used urea preferentially, as it was cheap, only buying in other fertilizers when they had spare income. Thus while crops were receiving enough nitrogen, soils rapidly became depleted in the other key nutrients. Last year, it is reckoned that some parts of India were applying nitrogen to potassium in a ratio of 32:1 rather than the recommended 4:1. In particular, as has happened in China, use of sulphur-containing fertilizers like TSP and ammonium sulphate fell at the expense of ammonium phosphates. The result was a gradual and accelerating depletion of sulphur in soils. The cumulative effect of all this on soils and consequently on crops was predictable. Farming yields were beginning to fall even as the subsidy bill continued to climb astronomically. The system was clearly broken, and the record high prices of 2007-8 brought matters to a head. The government simply could not afford to continue subsidies in the same manner in future, and it needed to find a way to fix soil nutrient ratios if it was going to continue to feed a population that is still growing and projected to reach 1.7 billion by the time it stabilises, some time around 2060.
The new nutrient-based subsidy scheme is still a compromise. Urea prices are still not decontrolled, although the government is to allow prices to rise without increasing the subsidy, and the few remaining naphtha-based urea producers will have two years to convert to natural gas production before their own preferential subsidies are axed. However, in theory, the new system should boost not only phosphate fertilizer consumption, but also sulphate fertilizer use; not only a way of rescuing soil fertility and crop yields in India, but also a double boost for the sulphur industry in one of the largest markets for fertilizer in the world.
And India is far from the only country that is having to deal with such problems of nutrient imbalance and falling agricultural yields at a time when its population is rising. It is an endemic problem all over Asia, including in China. If the new scheme is successful, we may be at the beginnings of a new boost to phosphate and sulphate fertilizer consumption elsewhere, with concomitant demand for sulphuric acid and hence for sulphur. While some of the other projected uses for the massive sulphur surplus we face over the next few years are only for small tonnages, according to IFA the total tonnage of fertilizer nutrient applied around the world is 900 million tonnes for N, P and K combined. If sulphate and phosphate application increased by only a few percentage points, that could still represent millions of tonnes of additional demand.