Panic buying pushes urea and DAP sales to record levels in Maharashtra, Punjab, Haryana and Karnataka

Urea sales rose nearly 10% year-on-year and DAP (Di-Ammonium Phosphate) sales surged by 39.32% between March 1 and May 25, 2026 — coinciding with the outbrea...

What Happened

Urea sales rose nearly 10% year-on-year and DAP (Di-Ammonium Phosphate) sales surged by 39.32% between March 1 and May 25, 2026 — coinciding with the outbreak of the West Asia conflict.
Farmers purchased approximately 5.05 million tonnes of urea and 1.24 million tonnes of DAP during this period, compared to 4.60 MT and 0.89 MT respectively in the same period last year.
Maximum sales jumps were recorded in Maharashtra, Punjab, Haryana, and Karnataka, with additional spikes in UP, Rajasthan, Assam, Chhattisgarh, and Jharkhand.
The government identified panic buying, pilferage, and over-stocking by farmers as the primary drivers; gas procurement costs for fertilizer manufacturing units rose 70–80% due to the war.
In response, the government announced a month-long 'Khet Bachao Abhiyan' (field-protection campaign) from June 1–30 targeting the 100 highest-consuming districts, aiming to reach over 5 lakh farmers with awareness about rational fertilizer use.

Static Topic Bridges

India's Fertilizer Subsidy Architecture: Urea vs. NBS

India operates a dual-track fertilizer subsidy system. Urea — the most widely used nitrogen fertilizer — is excluded from the market-linked Nutrient Based Subsidy (NBS) scheme. Its Maximum Retail Price (MRP) is administratively fixed at ₹242 per 45-kg bag (unchanged since 2018), with the government reimbursing manufacturers the difference between delivery cost and this fixed price. This artificially low price has historically incentivized excessive use and diversion.

Phosphatic and Potassic (P&K) fertilizers — including DAP — are covered under the NBS scheme (introduced in 2010), which provides a fixed per-kilogram subsidy based on nutrient content (N, P, K, S). While MRPs are technically decontrolled under NBS, the government periodically steps in with special packages: in 2024–25, it offered ₹3,500 per MT over and above NBS rates to keep DAP accessible amid global supply stress.

Urea MRP: ₹242 per 45-kg bag (fixed); fully price-controlled.
NBS covers DAP, MOP, SSP, MAP, TSP, and NPK blends; subsidy varies by nutrient content.
Fertilizer subsidy is India's second-largest subsidy outlay (after food).
NBS Kharif 2026 outlay approved by the Union Cabinet: approximately ₹41,534 crore.

Connection to this news: The fixed, below-market price of urea — combined with digitized Aadhaar-POS rationing — creates conditions for panic hoarding when supply uncertainty emerges. Farmers accumulate stocks beyond seasonal need, defeating the demand-side efficiency rationing was meant to achieve.

Direct Benefit Transfer and ePoS in Fertilizers

From September 2017, fertilizer subsidies shifted to a Direct Benefit Transfer (DBT) model. Retailers are equipped with Electronic Point-of-Sale (ePoS) devices that authenticate buyers via Aadhaar biometrics before releasing subsidized product. Subsidy is then credited to fertilizer companies on the basis of actual verified sales (Biometrically Authenticated Physical Uptake — BAPU model). This was designed to prevent leakage and diversion.

Aadhaar authentication is mandatory at ePoS for subsidized fertilizer purchase.
The system enables real-time sales tracking by district, enabling demand monitoring.
Despite digitization, panic buying and informal redistribution remain difficult to prevent under market stress.

Connection to this news: The digitized demand-side rationing system could not contain panic-driven over-purchasing. Authentic farmers buying more than they need still pass Aadhaar verification; the system detects diversion, not over-stocking. This reveals a structural limitation: digital tools designed for normal conditions are inadequate during supply-shock episodes.

India's Import Dependency for Fertilizer Inputs

India is critically dependent on imports for phosphate and potash — the 'P' and 'K' in NPK. The country lacks meaningful phosphate rock reserves and has virtually no potash deposits, importing nearly 100% of its MOP (Muriate of Potash) and about 60% of its phosphate requirement.

Key suppliers include China, Saudi Arabia (Ma'aden/SABIC), Jordan, Morocco (OCP), and Oman for phosphates; and Russia, Belarus, and Canada for potash. In 2023–25, India signed long-term offtake agreements with Saudi Arabia (3.1 MT/yr DAP/NPS) and Morocco's OCP (1.5 MT DAP + 1 MT TSP) to reduce exposure to Chinese supply disruptions.

Gas — used to manufacture urea domestically — is procured partly through open tenders, leaving domestic urea production vulnerable to international gas price spikes triggered by geopolitical events.

India imports ~60% of phosphate and ~100% of potash needs.
China was a dominant DAP supplier; export restrictions from China have repeatedly disrupted supply.
Gas price for open-tender procurement rose 70–80% after the West Asia conflict began.
Strategic fertilizer supply agreements now cover Saudi Arabia, Morocco, Oman, Jordan.

Connection to this news: The Iran-theater conflict disrupted key geopolitical corridors through which India procures gas and P&K fertilizers. The supply anxiety — even where actual physical shortage had not yet materialised — triggered the panic-buying spiral. This exposes the fragility of India's fertilizer supply chain to single-corridor disruptions.

One Nation One Fertilizer (ONOF) Policy

Launched in 2022, the ONOF policy mandates that all subsidized fertilizers be sold under the unified 'Bharat' brand, regardless of manufacturer. This was intended to prevent brand-loyalty-driven hoarding and make substitution easier. Alongside ONOF, the government promotes balanced fertilizer use through Soil Health Cards and awareness campaigns.

All subsidized urea and P&K fertilizers sold as 'Bharat Urea', 'Bharat DAP', etc.
Soil Health Cards issued to farmers recommend crop-specific NPK ratios, countering overuse.
The 'Khet Bachao Abhiyan' (June 2026) targets the 100 highest-consuming districts with awareness outreach.

Connection to this news: The campaign is a reactive policy measure when proactive structural reforms — moving urea under NBS, allowing price signals to moderate demand — could prevent panic-driven demand spikes more durably.

Key Facts & Data

Urea sales Mar 1–May 25, 2026: 5.05 MT (vs 4.60 MT previous year — +10% YoY)
DAP sales Mar 1–May 25, 2026: 1.24 MT (vs 0.89 MT — +39.32% YoY)
States with maximum DAP sales jump: Maharashtra, Karnataka, Punjab, West Bengal, Haryana
Gas procurement cost increase for fertilizer units: 70–80% due to West Asia war
Urea MRP fixed at ₹242/45-kg bag since 2018
NBS Kharif 2026 budgetary outlay: ~₹41,534 crore
India imports ~100% of potash and ~60% of phosphate requirements
India's Strategic Petroleum Reserve (SPR) analogue for fertilizers is absent — no buffer stock mechanism exists for DAP or MOP
'Khet Bachao Abhiyan': June 1–30, 2026; targets 100 districts; reach 5 lakh+ farmers