Food Versus Cars Dilemma

FOOD VERSUS CARS DILEMMA

The debate over “food versus fuel” has been important, especially about using crops

like sugarcane and maize for biofuels.

FOOD V/S CARS

1. A new issue is the “food versus cars” dilemma connected to phosphoric acid.
2. Phosphoric acid is a key ingredient in di-ammonium phosphate (DAP), which is India’s second most used fertilizer after urea.
3. This acid is increasingly being used in batteries for electric vehicles (EVs).

KEY ISSUES

• Role of Phosphoric Acid
  • DAP Fertilizer: DAP contains 46% phosphorus (P), which is important for early plant growth, especially for roots and shoots. It is made from rock phosphate that is processed with sulfuric acid.
  • LFP Batteries: phosphoric acid serves as the primary source of phosphorus (“P”) in lithium-iron-phosphate (LFP) batteries, which is a key component of the cathode material in these batteries. This met over 40% of global EV capacity demand in 2023, up from just 6% in 2020.
  • These batteries use iron phosphate, which is cheaper than nickel-based batteries that use more expensive materials.
• India’s Dependence on Imports:
• DAP Usage: India consumes 10.5-11 million tonnes of DAP annually, primarily imported from countries such as China, Saudi Arabia, Morocco, and Russia.

• Import Data (2022-23):
  • 7 million tonnes of DAP ($5.57 billion)
  • 7 million tonnes of phosphoric acid ($3.62 billion)
  • 9 million tonnes of rock phosphate ($891 million)
  • Total imports exceeded $10 billion.
• Changes in Phosphoric Acid Use
  • Phosphoric acid that was once used for fertilizers is now increasingly used in EV batteries after being further purified.
  • This trend is already noticeable in China, where two-thirds of EVs sold in 2023 used LFP batteries.
  • As China shifts its phosphoric acid towards battery production, the supply for fertilizers may drop, raising the “food versus cars” issue.
• Global Battery Market Dynamics
  • LFP batteries are not yet popular in the US and Europe, where their market share is below 10%. However, these regions may move towards batteries that use fewer critical minerals like cobalt, which are scarce worldwide.
  • Rock phosphate and iron ore are more readily available, suggesting that LFP batteries could become more important due to their lower cost, longer life, and safety, even if they have less energy density.

IMPLICATIONS FOR INDIA

• Impact on DAP Availability
  • India’s DAP imports from April-August 2024 were 51% lower than the previous year, mainly due to Chinese export restrictions.
  • With only 31 million tonnes of phosphate reserves and an annual production of 1.5 million tonnes, India relies heavily on imports for its nutrient needs.
• Challenges for Farmers
  • The reduced availability of DAP may be a problem for the upcoming winter-spring crop season, especially for crops like mustard, potato, and chickpeas, where DAP is crucial for root growth.
  • DAP sales fell by 20.5% during the monsoon season, pushing farmers to use more complex fertilizers that contain less phosphorus.
• Government Pricing Policies
  • The government has set the price of DAP at Rs 27,000 per tonne, just slightly above complex fertilizers, leading to losses for fertilizer companies and a preference for selling complex fertilizers instead of DAP.
  • The cost of imported DAP is around $620 per tonne, but with extra costs, the total reaches about Rs 61,000 per tonne, resulting in a loss of over Rs 7,100 per tonne for companies.

FUTURE DIRECTIONS

• Adaptation of Fertilizer Use
  • With limited phosphate resources, India may need to focus on fertilizers that use nutrients more efficiently, using less nitrogen (N), phosphorus (P), potassium (K), and sulfur (S).
  • A shift towards complex fertilizers may become necessary, as recent trends suggest.
• Securing Raw Material Supplies
  • India should secure supplies of raw materials, especially phosphates, through overseas partnerships and agreements.
  • Indian companies already operate phosphoric acid plants in Senegal, Jordan, Morocco, and Tunisia, but more facilities may be needed for stable supply.

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