Punjab's Urea Diversion Case: Subsidised Farm Fertiliser Found in Factories
The Punjab government has registered multiple FIRs and taken action against seven officials of Markfed and Milkfed, the state's agricultural marketing and milk producers' cooperatives, for allegedly diverting subsidised agricultural urea for industrial use.
Investigations reveal that neem-coated agricultural urea was removed from the farm supply chain, repackaged, and sold as technical-grade urea to industrial buyers such as cattle-feed plants and plywood manufacturers. This diversion undermines a key national welfare programme designed to support farmers.
The case has drawn national attention, not because it is unique to Punjab, but because it exposes systemic gaps in India's fertiliser subsidy regime. Similar instances have been reported in other states despite measures like mandatory neem coating and digital tracking.
The economics of diversion are stark: a 45-kg bag of subsidised agricultural urea costs farmers ₹266.50 (about ₹5.92 per kg), while technical-grade urea sells in the open market at ₹55-65 per kg (₹2,700-3,000 per bag). This huge price difference creates a strong incentive for illegal redirection.
Neem coating, introduced to prevent industrial use by making agricultural urea unsuitable for non-farm applications, has clearly not been foolproof. Punjab investigators found that supposedly neem-coated urea was being repackaged and sold as technical-grade urea, bypassing the safeguard.
Packaging differences are a key piece of evidence: agricultural urea comes in yellow bags with fertiliser markings and neem-coating declarations, while technical-grade urea is sold in plain white bags. The case highlights the need for stronger enforcement to protect the ₹1.5-lakh-crore fertiliser subsidy programme.
