Smart Fertilizer Use Could Unlock Big Rice Yield Gains in Eastern India, Says Study

A new World Bank Policy Research Working Paper by Julian Arteaga and Klaus Deininger, in collaboration with the Development Research Group at the World Bank and the Cereal Systems Initiative for South Asia (CSISA), has spotlighted a significant inefficiency in Indian agriculture. Their study, centered on rice farms in Andhra Pradesh, Bihar, and Odisha, reveals that farmers’ heavy dependence on nitrogen-based fertilizers, specifically urea, coupled with minimal use of potassium-based fertilizers, is not only undermining productivity but also harming soil health. The nitrogen-to-potassium ratio in fertilizer use is alarmingly skewed, driven by policy distortions such as unequal subsidies and accessibility issues. While nitrogen is widely subsidized and domestically produced, potassium must be imported, often making it less accessible and more expensive for farmers. The result is a farming system that overuses nitrogen, leading to diminishing returns, long-term soil degradation, and environmental consequences.

A Natural Experiment: Geography as a Tool for Causal Insight

The standout feature of this research lies in its innovative empirical approach. To examine the causal relationship between fertilizer composition and productivity, the authors utilize the geographic placement of fertilizer supply points as a natural experiment. Nitrogen-based fertilizers are produced at limited domestic manufacturing plants, while potassium-based fertilizers are entirely imported via seaports. This structural difference creates variation in access and cost depending on a farmer's proximity to a urea plant versus a port. By using the relative travel distances from villages to these locations as instrumental variables, the researchers sidestep the usual endogeneity problems that plague studies of agricultural input use. Their results show that a one-standard-deviation increase in the potassium-to-nitrogen (K/N) ratio results in an impressive 16% rise in rice yields. Even when total fertilizer expenditure remains constant, simply adjusting the ratio to double the K/N share leads to a 4.8% yield gain, roughly 0.204 tons more per hectare per season.

Yield Gains Without Spending More: A Practical and Scalable Solution

These findings have profound implications for agricultural policy. The study demonstrates that yield improvements are not necessarily tied to increased spending on fertilizers but rather to smarter allocation of nutrients. For example, by reallocating existing fertilizer expenditures to apply more potassium and less nitrogen, farmers can unlock significant productivity gains. This is particularly compelling in India’s context, where fertilizer subsidies cost the government upwards of US$10 billion annually. Encouraging more balanced fertilizer use could offer a dual dividend: better returns for farmers and reduced fiscal burden for the state. Moreover, while effects on revenue were found to be positive but less precise, this may be explained by data limitations on farmgate prices or local market saturation in response to increased outputs.

Why Don’t Farmers Use More Potash? The Knowledge Gap

Despite the clear agronomic and economic benefits, farmers continue to use fertilizers in an unbalanced manner. The reasons go beyond pricing and logistics. The study explores survey data from the REWARD watershed project in Odisha, which provides compelling evidence that a lack of awareness and agronomic knowledge is a major constraint. Alarmingly, only 45% of farmers surveyed could correctly identify potassium-based fertilizers. Even more revealing, the average farmer scored just 26% on a broader test measuring knowledge of soil health and fertilizer practices. Importantly, those farmers who did understand the role of potassium consistently achieved better yields and higher revenues. This indicates that information asymmetry is not just a side issue; it’s a primary bottleneck to optimal input use. The authors suggest that providing farmers with basic, general knowledge about the importance of balanced fertilization may be far more effective than distributing hyper-localized, complex soil prescriptions.

A Call for Smarter Policy and Digital Extension

The study recommends a three-pronged strategy for policymakers. First, recalibrate the subsidy regime to make potassium-based fertilizers more affordable relative to nitrogen. Second, invest in infrastructure to enhance the accessibility of imported nutrients in rural markets. Third, and perhaps most importantly, launch information campaigns to improve farmers’ understanding of nutrient diversity. Digital agricultural extension services, already gaining traction in South Asia and East Africa, could be leveraged to deliver this information cost-effectively at scale. These services, often accessible via mobile phones, can provide easy-to-understand guidance on why and how to balance fertilizers, potentially leading to significant improvements in productivity and profitability.

The findings also raise important questions for future research. For instance, what mix of policy instruments, subsidies, training, or market infrastructure would most effectively encourage balanced nutrient use? And what are the broader welfare effects, including environmental and fiscal impacts, of shifting fertilizer demand away from domestically produced nitrogen to imported potassium? These are critical questions for any policymaker aiming to sustainably boost agricultural output while preserving long-term soil health and ecosystem integrity.

In essence, the research delivers a powerful message: India’s farmers don’t necessarily need more fertilizer; they need the right mix of it. With thoughtful policy design and targeted knowledge interventions, the country can improve yields, reduce environmental harm, and even save money. The pathway to the next green revolution may well begin not in laboratories or markets, but in rethinking what farmers already put into their soil.