Sugar mills can now sell potash derived from molasses to fertiliser firms

Sugar mills can now sell potash derived from molasses (PDM) to fertiliser companies to earn additional revenue and also receive nutrient-based subsidies on it, food and public distribution secretary Sanjeev Chopra said on Thursday. The move is aimed at reducing India's fertiliser imports.

The union government said it has facilitated a mutually agreed price of ₹4,263 per metric tonne for the sale of PDM by sugar mills to fertiliser companies for the current year. PDM manufacturers can also claim a subsidy at ₹345 per ton at current rates under Nutrient Based Subsidy Scheme (NBS) of the department of fertilisers. Sugar mills and fertiliser companies will now discuss how they can enter into long-term sale and purchase agreements for PDM.

PDM, a potassium-rich fertiliser, is a by-product of the sugar-based ethanol industry, derived from ash in molasses-based distilleries. India currently imports 100% of the potash it needs for fertilisers, in the form of muriate of potash (MOP).

The government has been trying to make India self-sufficient in fertilisers. It aims to achieve self-sufficiency in urea by 2025 by increasing production from 30 million tonnes to 31-31.5 million tonnes and replacing demand for 2.5 million tonnes with alternatives such as nano urea and urea gold. The target could be achieved by setting up new plants with attractive incentives for manufacturers, union chemicals and fertilisers minister Mansukh Mandaviya told Mint in a recent interview.

“Production of PDM domestically will reduce import dependency and will make India atmanirbhar (self-reliant) in the production of PDM. The goal is to produce 1 to 1.2 million tonnes of potash ash from ethanol distilleries and use it in the farming sector. At present about 500,000 tonnes of potash ash generated from ethanol distilleries is being sold domestically,” Chopra said.

Distilleries produce a waste chemical called spent wash during ethanol production, which is burned to produce ash. This ash can be processed to produce PDM, which has 14.5% potash content and can be used by farmers as an alternative to MOP, which is 60% potash.

Data from the department of chemicals and fertilisers showed that India’s fertiliser requirement ranges from 58 to 63 million tonnes a year, but it produces only about 43 to 46 million tonnes of fertilisers. The rest is imported.

India, the second-highest consumer of fertilisers after China, is entirely dependent on imports for MOP, and also imports 4.3 to 4.7 million tonnes of phosphate rock, 9.1 to 9.8 million tonnes of urea, 5.3 to 5.4 million tonnes of di-ammonium phosphate, and 1.2 to 1.4 million tonnes of nitrogen, phosphorus, and potassium fertilisers.

The government spends a hefty amount on this. India’s fertiliser import bill was ₹2.2 trillion in 2022-23. It also spends a huge chunk of the union budget on fertiliser subsidies. In 2022-23, the government spent about ₹2.55 trillion, a record high, on fertiliser subsidies.

Finance minister Nirmala Sitharaman, in her budget speech earlier this month, said the government would reduce the allocation for fertiliser subsidies by 13% to ₹1.64 trillion in FY25 from the revised budget estimate of ₹1.89 trillion for FY24. The original allocation for fertiliser subsidies for FY24 was ₹1.75 trillion.