How do geopolitical conflicts and trade wars pass through input prices to farm incomes? Analyse India's fertilizer-import vulnerability in this light.

Fertilizer, fuel and feedstock gas are traded worldwide. Wars and tariff fights therefore reach the farm gate as a cost-price squeeze. In 2026, U.S. farm debt hit a record of more than $605 bn (inflation-adjusted) after such shocks [1]. This is a warning for import-dependent India.

How shocks pass through to farm incomes

• Export curbs: China's nitrogen fertilizer exports fell by more than 90% in 2024 as Beijing put its own supply first [2]. The fertilizer price index was projected to rise by more than 20% in 2025, with urea up about 30% [3].
• War and energy: The U.S.-Israeli war with Iran raised fertilizer and fuel costs for farmers [1].
• Lost export markets: China put retaliatory tariffs on U.S. soybeans, maize and wheat in 2025 [4]. Crop prices fell while input costs rose.
• Debt spiral: Thin margins led to more bankruptcies, so banks tightened credit. Farmers then turned to vendor credit. One study found that this kind of equipment debt was up to four times the official estimate [1].

Chain: conflict/tariff → input cost ↑ + output price ↓ → margin squeeze → debt ↑ → income ↓

India's fertilizer-import vulnerability

Exposure

• Structural dependence: In 2023-24, India used about 601 LMT of fertilizer and imported 177 LMT of it. Only about 40% of DAP is made at home, and MOP is 100% imported [5].
• Fiscal exposure: The fertilizer budget depends on natural gas prices and global market trends. In 2024-25 it was raised mid-year from ₹1.68 lakh crore to ₹1.92 lakh crore [5].
• Price risk for farmers: P&K fertilizers are decontrolled under the Nutrient Based Subsidy scheme [5]. When DAP or MOP prices jump, farmers can still face higher costs or shortages at sowing time.

Buffers

• Subsidy cushion: Urea is sold at a fixed ₹242 per 45-kg bag (unchanged since 2018). A one-time ₹3,500/tonne DAP special subsidy was also given [5]. These shift the shock from the farmer to the government budget.
• Supply-side steps: Six new urea plants have added 76.2 LMT of capacity. India has signed long-term supply deals with Saudi Arabia, Nepal, Bhutan and Sri Lanka [5]. Nano and neem-coated urea reduce how much fertilizer is needed [5].

India's subsidies keep farm incomes fairly stable when global shocks hit. The cost is a larger fiscal burden, and the country remains largely dependent on imported DAP and potash. Diversifying sources through overseas joint ventures, exploring domestic phosphate rock [6] and promoting balanced, efficient nutrient use would make Atmanirbharta in inputs a buffer for SDG-2 food security.