fertilizer scenario in india - indian research journals

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India made impressive gains in the field of agricultural production and ..... than propping up prices of crops or lowering fertilizer prices trough subsidies.
International Journal of Social Science & Interdisciplinary Research__________________________________ ISSN 2277- 3630 IJSSIR, Vol.2 (1), January (2013) Online available at indianresearchjournals.com

FERTILIZER SCENARIO IN INDIA DR. P. MALA Assistant Professor Department of Economics Government Arts College Udumalpet Tamilnadu.

ABSTRACT India made impressive gains in the field of agricultural production and harvested a record in food grains production of 230 million tonnes during 2007-2008. Introduction of HYV‟s and hybrid varieties brought optimism about fertilizer response superiority of modern varieties. The total nutrient consumption (N+P2O5 +K2O) touched level of 264lakh million tonnes during 2009-10, the highest so far. Since the rain fed areas, which constitute 70% of the cultivated areas, consume only 20% of the total fertilizers, the government has been taking steps in recent years to increase the consumption of fertilizers in these areas. Even though India is the third largest fertilizer user, average rate of nutrient application is only 85 kg/ha. The use of fertilizers is affected by a number of factors like irrigation, high yielding variety seeds, size of the farm credit etc. Increased area under high yielding varieties led to increased food grains production. With effect from 1 April 2003, the Government implemented the “New Fertilizer Policy”, which allowed urea manufacturers to market initially 25 percent and subsequently 50 percent of their production outside the purview of distribution control. The efficiency of fertilizer use could be improved through fertilization practices that include an application of macronutrients and micronutrients according to crop requirements. An adequate supply of credit for farmers and distributors is necessary to ensure the availability of fertilizers when and where they are required.

INTRODUCTION “The secret of rapid agricultural progress in the under developed countries is to be found much more in agricultural extension, in fertilizers, in new seeds, in pesticides and in water supplies than in altering the size of the farm, in introducing machinery, or in getting rid of middle men in the marketing process”. W.A.Lewis The significance of agriculture in India arises from the fact that the development in agriculture is an essential condition for the development of the rational economy. It suffices to note that during the last 50 years the country has achieved and sustained historically unprecedented growth of output (3% per year). Expansion of cultivated area has virtually come to a stop in recent years. Growth in yields per hectare of cultivated area has become increasingly

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important and is now the predominant source of growth. The virtual elimination of food grain import can also be viewed as an achievement. (Swaminathan, 2002). With the current food grains production standing at about 218 million tonnes, India needs to produce an additional 5-6 million tonnes of food grains annually to meet the requirement of an increasing population. The area, production and yield of food grains are depicted in Table I. TABLE- I AREA, PRODUCTION AND YIELD OF FOOD GRAINS IN INDIA (2001 – 2010) YEARS

AREA (MLN HEC)

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

122.8 113.9 123.4 120.1 121.6 123.7 124.1 122.8 121.3

PRODUCTION (MLN TONNS) 212.9 174. 8 213.2 198.4 208.6 217.3 230.7 234.4 218.2

YIELD (MLN TONNS) 1734 1535 1727 1652 1715 1756 1860 1909 1798

Source: Economic Survey 2010-2011 India made impressive gains in the field of agricultural production and harvested a record in food grains production of 234 million tonnes during 2008-2009. To boost up agricultural productivity in India, the new agricultural strategy in the form of green revolution was introduced in mid-sixties. Thus the modern agricultural inputs, which have synergistic effect on yields, became the focal point of the strategy. As a result, the importance of chemical fertilizers grew enormously. Adoption of new agricultural technology has a significant role in strengthening the farmers hold on resources and there by enabling them for better harvest. The new agricultural strategy also improves the way in which the inputs are effectively combined and agricultural operations managed so as to get maximum returns. Specifically, the new agricultural technology encompasses the use of high yielding variety seeds fertilizers, manures, pesticides, machines etc. Of the various components of agricultural technology, use of fertilizer is most important in boosting agricultural production and productivity. Introduction of HYV‟s and hybrid varieties brought optimism about fertilizer response superiority of modern varieties. The increased use of chemical fertilizers is attributed to factors such as (i) Compensating the adverse effects of a decline in per capita arable land (ii) Meeting the deficiency of soil arising out of various forces including intensive cultivation of land in all the different regions in the country and (iii) Exploiting the prevailing potential for higher use of chemical fertilizers and the need for its exploitation in Indian agriculture. Of late, secondary and micronutrient deficiencies are also emerging and the crop response to these nutrients is increasing. There is a need to add plant nutrients to the soil through mineral fertilizers, organic manures, bio fertilizers etc. In India the highs yielding varieties of 63

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cereals is used in the „Green Revolution‟ and have worked as a catalyst in increasing the fertilizer demand. (Thyagarajan, 2002). TRENDS IN FERTILIZER GROWTH IN INDIA The total indigenous capacity utilization of N was 99.2% and capacity utilization of P2O5 was 76.5% in 2009-10. The domestic production of N and P2O5 was 29 000 and 10 000 tonnes, respectively, in 1951/52. By 1973/74, this had increased to 1.05 million tonnes N and 0.325 million tonnes P2O5. As a result of the oil crisis in the mid-1970s and the consequent sharp increase in the international prices of fertilizers, the Government of India encouraged investment in domestic fertilizer production plants in order to reduce dependence on imports. It introduced a “retention price” subsidy in 1975/76. The scheme led to a sharp increase in domestic capacity and production between the mid- 1970s and the early 1990s. The total production of N and P2O5 rose from 1.51 million and 0.32 million tonnes respectively in 1975/76 to 7.30 million and 2.56 million tonnes in 1991/92. In 1992/93, phosphatic and potassic fertilizers were decontrolled. As a consequence, the rate of growth in the demand for these products slowed. Domestic production during 1998-99 of nearly 13.6 million tonnes of nitrogenous and phosphate fertilizers (NP) fell short of consumption by over 12%Domestic production trends is shown in Table 11. Domestically produced nitrogenous fertilizer urea is still price controlled and involves a heavy subsidy. The shortfall in domestic production of N and P is met from imports, which invariably involves a subsidy since domestic selling prices are kept low compared to the landed cost of imported fertilizers. In case of potash, the entire requirement is imported. The total production of N reached 11.9 million tonnes and that of P2O5 reached 4.3 million tonnes in 2009-10. Availability of raw material/intermediates has been a major bottleneck in the increase in production of fertilizers. There has been a shift in the product pattern over the years. SSP and AS dominated fertilizer production before the 1960s whereas urea and DAP dominate production at present. In 2008/09, urea accounted for 84.6 percent of total N production and di-ammonium phosphate (DAP) accounted for 59.9 percent of total P2O5 production. India imports mainly urea, DAP and potassium chloride (MOP). There are 56 large size fertilizers plants in the country manufacturing a wide range of nitrogenous, phosphatic and complex fertilizers. Out of these, 30 units produce urea, 21 units produce DAP and complex fertilizers, 5 units produce low analysis straight nitrogenous fertilizers and the remaining 9 manufacture ammonium sulphate as product. Besides, there are about 72 medium and small-scale units in operation producing SSP. In case of phosphates, the paucity of domestic raw material has been a constraint in the attainment of self-sufficiency in the country. Indigenous rock phosphate supplies meet only 5-10% of the total requirement of P2O5. A policy has therefore been adopted which involves mix of three options, viz,domestic production based on indigenous/ imported rock phosphate, imported sulphur and ammonia; domestic production based on indigenous / imported intermediates, viz. ammonia and phosphoric acid; and third, import of finished fertilizers. During 2008-09 roughly 65% of the requirement of phosphatic fertilizers was met through the first two options (Annual Report, 2009-10).The Production, Importation and Consumption of Fertilizers is shown in Table-II.

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TABLE II Consumption, Production and Import of Fertilisers from 1999- 2010 (thousand tons of nutrients) Year Consumption Production Imports N

P

K

TOTA L

N

P

K

TOTA L

N

P

K

TOTA L

19992000

115.92

47.99

16.78

180.69

108.9

33.99

-

142.89

8.33

15.03

17.34

40.75

2000-01

109.2

42.15

15.67

167.02

109.61

37.43

-

147.04

1.54

3.96

15.41

20.91

2001-02

113.1

43.82

16.67

173.59

107.68

38.6

-

146.28

2.69

4.29

17.01

23.99

2002-03

104.74

40.19

16.01

160.94

105.61

39.04

-

144.65

0.67

1.7

15.2

17.57

2003-04

110.77

41.24

15.98

167.99

106.34

36.32

-

142.66

1.32

3.38

15.48

20.18

2004-05

117.14

46.24

20.61

183.99

113.39

40.64

-

154.03

4.11

2.96

20.45

27.52

2005-06

127.23

52.04

24.13

203.4

113.54

42.21

-

155.75

13.85

11.21

27.47

52.53

2006-07

137.73

55.43

23.35

216.51

115.78

45.18

-

160.96

26.82

13.07

20.69

60.58

2007-08

144.19

55.15

26.36

225.70

109.0

38.07

-

147.07

36.77

13.91

26.53

77.21

2008-09

150.90

65.06

33.13

249.09

108.70

34.64

-

143.34

38.44

29.27

33.80

101.51

2009-10

155.80

72.74

36.32

264.86

119.0

43.21

-

162.21

34.47

27.56

29.45

91.48

Source: Economic Survey 2010-11 Imports meet the entire MOP requirement as there are no known natural potash deposits in the country. In 2010, MOP imports were 4.74 million tonnes, DAP was imported to the order of 6.82 mln tons. With the introduction of high-yielding variety (HYV) seeds, there was acceleration in the growth of fertilizer consumption. It reached 12.73 million tonnes in 1991/92 as against 0.78 million tonnes in 1965/66. After the decontrol of P and K fertilizers the growth in consumption slowed. The highest consumption was recorded in 1999/2000 (18.07 million tones of nutrients). Since then, the growth in consumption has been erratic. In 2003/04, total nutrient consumption was 16.8 million tonnes and it increased to 26.4 mln tons in 2009-10. The N: P2O5:K2O use ratio has favoured N. This ratio narrowed from 8.9:2.2:1 in 1961/62 to 5.9: 2.4:1 in 1991/92. After decontrol of P and K fertilizers in 1992/93, the ratio widened to 9.7:2.9:1 in 1993/94. Despite the introduction of a price concession on P and K fertilizers and other measures taken to increase their consumption, the ratio remained wide and in 1996/97 it was 10:2.9:1 Subsequently it has tended to improve, reaching 6.9:2.6:1 in 2003/04. While India uses many types of fertilizers, urea accounts for most of the consumption of N and DAP for most of that of P2O5. Urea accounts for 82 percent of the total consumption of straight N fertilizers. Other straight N fertilizers, such AS, CAN and ammonium chloride account for only 2 percent. The share of N through DAP and other complex fertilizers is about 16 percent. DAP accounts for 63 percent of total P2O5 consumption and other complex fertilizers for 27 percent. Single superphosphate (SSP) accounts for 10 percent of total P2O5 consumption. The consumption of total nutrients per hectare of gross cropped area, (Table: 111) increased from 96.6 kg during 2004-05 to 108.5 kg during 2005-06to 111.8 kgs in 200607 and 135.3 kgs in 2009-10.

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Table: 111 Per Hectare Consumption of Fertilizers in Nutrient Terms From 2006-11 (In Lakh Tonnes) Product 2006-07 2007-08 2008-09 2009-10 Nitrogenous(N) 137.73 144.19 150.90 155.80 Phosphatic (P) 55.43 55.15 65.06 72.74.

*2010-11 80.56 41.72

Potash (K)

23.35

26.36

33.13

36.32

17.13

Total (N+P+K)

216.51

225.70

249.09

264.86

139.41

Per Hectare Consumption (kg)

111.8

116.50

127.2

135.3

-

Source: Economic Survey 2010-11 * Refers to estimated Kharif Absence of assured water supply, which is a primary condition for the application of chemical fertilizers, is lacking over large parts of the country. Since the rain fed areas, which constitute 70% of the cultivated areas, consume only 20% of the total fertilizers, the government has been taking steps in recent years to increase the consumption of fertilizers in these areas. The government has sanctioned a national project and development of fertilizers use in low consumption rain fed areas in 60 identified districts in 16 states. The trends in intensity of fertilizer consumption in India (kg/ha) 1959-2006 is seen in Table-111. TABLE-111 TRENDS IN INTENSITY OF FERTILIZER CONSUMPTION IN INDIA (kg/ha) 19592006 YEAR CONSUMPTION, KG/HA N P2O5 K2O Total 1959-1960 1.5 0.35 0.14 1.99 1969-1970 8.36 2.56 1.29 12.21 1979-1980 20.63 6.79 3.58 31 1989-1990 40.52 16.54 6.41 63.47 1999-2000 61.19 25.33 8.86 95.38 2000-2001 58.8 22.7 8.44 89.94 2001-2002 59.45 23.04 8.76 91.25 2002-2003 59.27 22.74 9.06 91.07 2003-2004 58.1 21.63 8.38 88.12 2004-2005 61.44 24.25 10.81 96.51 2005-2006 66.74 27.3 12.66 106.69 Source: FAI Fertilizer Statistics 2006-2007

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Even though India is the third largest fertilizer user, average rate of nutrient application is only 85 kg/ha. While the North and South zones have a consumption of more than 100 kg/ha, in the East and West zones the consumption is lower than 80 kg/ha. Consumption is highly concentrated in certain areas with many large areas receive very little fertilizer. Out of 500 districts (sub-units of state), 25 percent of total fertilizer is consumed in 38 districts, 50 percent in 102 districts and 75 percent in 201 districts. To encourage balanced fertilizer use, the central government continues to provide subsidy on decontrolled fertilizers such as Di-ammonium phosphate (DAP) and Muriate of potash (MOP). FACTORS AFFECTING FERTILIZER CONSUMPTION The use of fertilizers is affected by a number of factors like irrigation, high yielding variety seeds, size of the farm credit etc. Increased area under high yielding varieties led to increased food grains production. These high yielding varieties respond more to the use of chemical fertilizers. There exists a large gap between actual and potential level in fertilizers use. . Increased fertilizer use efficiency leads to a number of benefits to Indian agriculture. They are economy in use of fertilizers, reduction in unit cost of production, prevention of fall in agricultural productivity, production of environmental quality and efficient use of other inputs such as irrigation and high yielding varieties in developing countries actual fertilizer use is usually below the economic potential. In the production process in agriculture cultivator‟s demand for fertilizers generally depends on three factors, viz., (a) Decision on fertilizer application, (b) Choice of crop (i.e., for which crop fertilizer should be applied); and (c) Rate of application (per unit of cropped area). The first factor is basically a state of awareness and knowledge of the farmer regarding fertilizer use on crops he commonly grows. The other two issues are generally governed by profitability of fertilizer use at farm level. The level of fertilizer use increases with increased response to the use of fertilizers. The level of fertilizer use is influenced by the price of fertilizer relative to the price of the product. Agro-climatic factors like rainfall and its distribution, irrigation and its quality, genetic characteristics of seeds, fertility of the soil, proportion of area under fertilizer intensive crops (cropping pattern) etc and technological factors like method of application of fertilizers, time of application and choice of fertilizer material also influence usage of fertilizers. The institutional factors such as access to credit and its cost for small farmers in particular, farmer‟ asset or liquidity, tenancy system, markets for inputs and output, distribution of input and output, distribution of fertilizer outlets, supply and distributional conditions for fertilizers influence demand for and supply of fertilizers. Desai (1990), pleads strongly for nonprice factors such as irrigation, diffusion of HYV, cropping pattern, supply and distribution of fertilizers and agricultural extension services as major determinants of fertilizer demand, more than propping up prices of crops or lowering fertilizer prices trough subsidies. Kumar and Mruthyunjaya (1994), felt irrigation and area under HYVs influence fertilizer response to crops yields. It would increase the scope for fertilizer use. Under un irrigated

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conditions, rainfall during the pre-sowing and at different crop growth stages exercise influence on fertilizer demand and its variation would make yield fluctuates. GOVERNMENT POLICY TOWARDS FERTILIZER USAGE The economic reforms initiated since 1991 has put the economy on a high growth path. Agricultural liberalization and deregulation would lead to change in relative prices, better accordance efficiency and improved incentive. Globalization of the Indian economy has opened access to new markets and new technology. Industrial countries liberalize their agricultural trade; new opportunities are being opened for India‟s agricultural exports. Agricultural liberalization has placed India in a better position for food grains trade. On the agricultural front although food production increased, it was lower than the growth rate of population. According to Motsara (2002), the New Economic Policy of the government decontrolled the marketing of chemical fertilizers and cut down subsidies given for chemical fertilizers. This resulted in price hike in the retail level, which is expected to directly affect the fertilizer consumption at farm level. There is a positive correlation between the application of balanced fertilizers and the yield rate. Soil fertility (capacity of a soil to provide crops with essential nutrients) is to be increased to raise crop productivity given the limitation for extensive cultivation. Realizing the importance of application of fertilizer, the Government extends subsidy to the farming community. After 1975-76, both imported and domestic fertilizers were subsidized. In the recent past, subsidy on domestic fertilizer has become several times larger than on imported fertilizers. The semi medium and medium farms which account for about 60% of the total NPK consumption in the country enjoy the maximum share of fertilizer subsidy. In order to step up fertilizer consumption, a series of measures were undertaken in 198788. These include arrangement for ensuring supply of fertilizer, promotion of sales of fertilizers through the District Lead Fertilizer Scheme, extension support of fertilizer industry and TV system analysis and advice by a network of soil testing laboratories on the judicious use of fertilizers based on the results of soil analysis, (Economic survey 1990-91). The New Economic Reforms in India, which was introduced in 1991, accelerated the following changes in the agricultural sector with a view to reducing budgetary subsidies and promoting a more flexible price structure. The government announced increase in a number of administrated prices including important inputs (Petroleum products and fertilizer), for savings (such as railway fares, bus transport) and for agricultural commodities such as sugar. The Fertilizer Retention Price and Subsidy Scheme was started in Nov 1977. Under this scheme the fertilizers were supplied at subsidized prices to farmers throughout the country. As for manufacturers, the price was fixed in such a way that their cost of production including cost of marketing was covered and they got a 12% post-tax return on the net worth of the unit. Norms were fixed for the consumption of raw material, utilities and services, capacity utilization and depreciation etc. The price so fixed was called “Retention Scheme”. The scheme was instituted for nitrogenous fertilizers initially and was extended to phosphatic complex fertilizers in 1979. The Government‟s decision of 1977 of introducing fertilizer subsidy had two fold objectives. 68

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One was of enabling the farmers to get fertilizers at fair prices and the other of helping the industry get a reasonable return on investment. The expenditure under the RPS scheme has been Rs 8,744.07 crore and Rs 9,480.96 crore during 1999-2000 and 2000-2001 respectively. Fertilizer subsidy increased from Rs 375 crore in 1981-82 to Rs 4800 crore in 1991-92.Realising the burden of huge fertilizer subsidy, Government of India, on December 10,1991 constituted a Joint Parliament Committee to contain this subsidy and regulate fertilizer prices. On August 20, 1992 the committee recommended the partial decontrol of fertilizers. Consequently, the Government announced a 10% reduction in prices of urea and removed price control and subsidy on P and K fertilizers. Other measures adopted by the Government to contain fertilizer subsidy included increasing the capacity utilization level from 80% to 90%. As a result of the policy change of August 1992, the consumption of all fertilizer nutrients in the country decreased during 1992-93 and 1993-94. The decline in the consumption of P and K fertilizers during 1992-93 was mainly due to rise in their prices consequent upon decontrol. Further on June 7, 1994, government announced a 20% rise in farm gate price of urea and continuation on adhoc subsidy on the decontrolled P, K and complex fertilizers for 1994-95. The decontrol of P and K increased their prices, which resulted in proportionately higher usage of urea. (Dr.Kayarkanni, 2000). It is programmed to analyze 5.54 lakh samples through Soil Testing Laboratories and 2.88 lakh samples through Mobile Soil Testing Laboratories during 2006-2007. The above laboratories also suggest suitable reclamatory measures for the problem soils, preparing village level fertility index and assessing the quality of irrigation water. There are 14 Fertilizer Control Laboratories in the State functioning with an annual analyzing capacity of 17,220 samples. During 2006-2007, against the target, 15,938 samples were drawn, 15,352 samples analyzed and 662 samples found non-standard. With effect from 1 April 2003, the Government implemented the “New Fertilizer Policy”, which allowed urea manufacturers to market initially 25 percent and subsequently 50 percent of their production outside the purview of distribution control. This practice continues today. Urea manufacturers can now market 50 percent of their production as they wish. The total quantity of fertilizer materials distributed annually increased from 0.3 million tonnes in 1951 to 34.9 million tonnes in 2003/04. This large volume of fertilizer is distributed through a well-developed marketing network spread throughout the country. Cooperatives supply almost 35 percent of the total quantity available from domestic production and importation. Private channels distribute the balance (65 percent). As on 31 March 2004, the total number of sale points was 282 468. Of these, 77 percent were privately owned and 23 percent were in cooperatives and other institutional channels. The subsidy on fertilizers is given to the farmers by routing it through fertilizer manufacturers. The Government of India introduced the Retention Pricing Scheme (RPS) on urea in 1977 and on complex fertilizers in 1979. Under the RPS, a normative cost of production was worked out for each company. The difference between the normative costs of production plus the distribution cost and the retail price represents the subsidy to the farmers. Effective from August 1992, P and K fertilizers were decontrolled. This led to high prices of these fertilizers.. However, urea continued to be under the RPS until 31 March 2003. Effective from 1 April 2003, 69

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the RPS on urea was replaced by the Group Pricing Scheme (GPS). Table – 1V shows fertilizer subsidies in India during 2002-10. FERTILIZER SUBSIDY (Rs Crores) TABLE-1V Years

Subsidy Released Urea Indigenous(P&K) Total(P&K)

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

7788 8509 10986 11749 15354 23204 33901 25258

2488 2606 3977 4500 6648 10334 32957 15447

737 720 1165 2050 3950 6800 32598 16351

Total Imported(P&K) Subsidy Disbursed 3225 3326 5142 6550 10598 17134 65555 31798

11013 11835 16128 18299 25952 40338 99456 57056

Net Incidence of Subsidy 17498 20841 28826 36550 111614 74214

Source: Economic Survey 2010-11 The Government provides a fertilizer subsidy to fill the gap between the cost of production / import cost plus distribution of fertilizers, and their retail prices. The objective of the introduction of the fertilizer subsidy was: (i) to provide food grains to the people at affordable prices; (ii) to insulate farmers from variations in production costs and to ensure reasonable returns from fertilizer use; and (iii) to ensure a reasonable return to the fertilizer industry (Singh, 2001). In 1944, the Government of India established the “Central Fertilizer Pool” as the official agency for the distribution of all available fertilizers at fair prices throughout the country. All fertilizers, whether domestically produced or imported, were pooled together and distributed through state agencies. With effect from 1 April 2003, the Government implemented the “New Fertilizer Policy”, which allowed urea manufacturers to market initially 25 percent and subsequently 50 percent of their production outside the purview of distribution control. This practice continues today. Urea manufacturers can now market 50 percent of their production as they wish. The total quantity of fertilizer materials distributed annually increased from 0.3 million tonnes in 1951 to 34.9 million tonnes in 2003/04. This large volume of fertilizer is distributed through a well-developed marketing network spread throughout the country. Cooperatives supply almost 35 percent of the total quantity available from domestic production and importation. Private channels distribute the balance (65 percent). On 31 March 2004, the total number of sale points was 282 468. Of these, 77 percent were privately owned and 23 percent were in cooperatives and other institutional channels. Currently, about 75 percent of the total quantity of fertilizer is moved by rail and the remaining 25 percent by road. The average distance of fertilizers moved by rail is about 850 km.

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However, within a radius of 200 – 250 km from the plant, most of the fertilizer materials are moved by road. The economics of movement favours road transportation up to this distance. The subsidy on fertilizers is channeled through the fertilizer production industry, being calculated to ensure a reasonable return to the industry. Fertilizer distribution is effected through private channels, cooperatives and certain institutions. There are 283 000 sales outlets in the country. The population of India exceeds 1 000 million people. It is estimated that it will reach 1 400 million by 2025, requiring 300 million tonnes of food grain. Little extra land is available and the increase in production will have to come from higher yields, for which there is ample scope. As fertilizer is an essential input for agricultural production, the Government‟s objective is to make this critical input available to the farmers at affordable prices. Until 24th August 1992, the prices of all the fertilizers were controlled, the Government setting the maximum retail prices of various fertilizers. With effect from 25 August 1992, the prices of phosphate and potash fertilizers were decontrolled. The prices of urea continued to remain under control. Following decontrol, the prices of phosphatic and potassic fertilizers rose sharply. Since 1997/98 the Government has fixed indicative maximum retail prices of decontrolled fertilizers, uniform throughout the country. to promote balanced use of fertilizers, the Department of Fertilizers has notified on 17th June 2008 a nutrient based pricing regime for all subsidized fertilizers. It has been further decided to fix the farm gate price of nutrients at the level of their existing price in straight fertilizers viz. Urea, DAP, MOP and SSP. This will lead to significant reduction in existing Maximum Retail Prices (MRPs) of complex fertilizers. Under this regime, the farm gate price of each nutrient will be uniform across all subsidized fertilizers. The selling price of subsidized fertilizers will be determined on the basis of the nutrients contained therein. The maximum retail prices of fertilizers are seen in Table V. TABLE-V MAXIMUM RETAIL PRICES OF FERTILIZERS (Rs per MT) YEARS Nutrients (Price / Kg) From 12.3. 03 to From 18.06.08 17.6. 08 Urea N 4830 4830 DAP 9350 9350 MOP K2O 4455 4455 MAP 9350 9350 TSP 7460 7460 SSP 3400 3400 AS(W.E.F. 2008) 10350 Source: Department of Fertilizers, Government of India The added problem is that, now we will have to produce more food and other agricultural commodities under conditions of diminishing per capita arable land and irrigation water resources. Because of continuous cultivation and intensification of agriculture in recent years, there has been progressive and substantial depletion of the soil reserves. Of late, secondary and micronutrient deficiencies are also emerging and the crop response to these nutrients is increasing. There is a need to add plant nutrients to the soil through mineral fertilizers, organic

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International Journal of Social Science & Interdisciplinary Research__________________________________ ISSN 2277- 3630 IJSSIR, Vol.2 (1), January (2013) Online available at indianresearchjournals.com

manures, bio fertilizers etc. In India the highs yielding varieties of cereals is used in the „Green Revolution‟ and have worked as a catalyst in increasing the fertilizer demand. India‟s food grain requirement to feed the estimated population of 1 400 million by 2025 will be 300 million tonnes (based on rice, i.e. unhusked paddy rice). There will be a corresponding increase in requirement of other crops such as cotton, sugarcane, fruits and vegetables. The country will require about 45 million tonnes of nutrients (30 million tonnes for food grains and 15 million tonnes of nutrients for other crops) from various sources of plant nutrients, i.e. fertilizers, organic manures and bio fertilizers. In order to reach the required yield levels, fertilizer use will need to increase and improve. An adequate supply of credit for farmers and distributors is necessary to ensure the availability of fertilizers when and where they are required. There have been major policy initiatives in the fertilizer sector. A few recent ones are as follows: (i) Introduction of nutrient-based subsidy scheme with effect from 1 April 2010. Under the nutrient based subsidy scheme (NBS), Government has amended subsidy per kg of nutrients N, P, K and S contained in P & K fertilizers as well as per MT of fertilizers. Maximum retail prices (MRPs) of the decontrolled P&K fertilizers have been kept open and companies are free to announce their MRPs. (ii) A uniform freight subsidy policy has been announced under which rail freight is paid on actual and road freight on a normative average district lead for urea. (iii) Distribution and movement of fertilizers are monitored through the online web-based fertilizer monitoring system (FMS), which tracks the import, production, movement, availability, distribution, and sale of fertilizers in all States. (v) Government has placed 20 per cent of the produced/imported decontrolled P & K fertilizer under the Movement Control Order of the Department of Fertilizers as per the Essential Commodities Act 1955 with the objective of making fertilizers available in the difficult areas. (vi) The manufacturers of customized and mixture fertilizer are allowed by the Government to source the subsidized fertilizers from the manufacturers/importers after their receipt in the districts. (vii) Government has put the export of (DAP) and MOP in the restrictive category to discourage export and illegal diversion. REFERENCES 1. Desai, G.M., “Issues and Themes in Growth of Fertilizer use in India”, Dr. V.S. Panse Memorial Lecture, Indian Society of Agricultural Statistics, 1990. 2. Dr.Kayarkanni (2000), “Fertilizer Use on Three Major Crops (Paddy, Sugarcane, Cotton) in Madurai District of Tamil Nadu”, Agricultural Situation in India, August 46(7). 3. Department of Fertilizers, Government of India. 4. Economic Survey, 2010-11. 5. Fertilizer Statistics- 2006-2007. 6. Kumar, P., and Mruthyunjaya, (1994), “Productivity and Sources of Growth in Rice: India”, Economic and Political Weekly, 19, 53, PP: A183-A188. 7. Motsara, M.R. 2002... Fert. News, 47(8): 15–21. 8. Singh, M.V. Evaluation of current micronutrient stocks in different agro ecological zones of India for sustainable crops production. Fert. News, 42(2): 25–42. 2001. 9. Swaminathan, M.S, (2002), “Agrarian Prosperity-In our Quest For Quality Produce.”, The Hindu-Survey of Indian Agriculture, PP:9-13. 10. Thiyagarajan, T.M.,(2002), “Soil Health and its Care For Sustainable Agricultural Production”, Agriculture 2002, Tamilnadu Agricultural University, PP:130-149. 72