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Fertiliser Consumption and Marketing in India: An Economic Analysis

KrishiKosh

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Field Value
 
Title Fertiliser Consumption and Marketing in India: An Economic Analysis
M.Sc.
 
Creator Najibullah
 
Contributor V. C. Mathur
 
Subject fertilizers, biological phenomena, productivity, marketing, imports, biological development, nutrients, retail marketing, nitrogen, economics
 
Description The use of chemical fertilisers has been an important component of India’s
agricultural development strategies to increase crop production through higher yields. The
Government of India has provided appropriate policy support to ensure wide and timely
availability of fertilisers at affordable prices to farmers and incentives to the fertiliser
industry. While the interventions have helped to increase consumption of fertilisers in
absolute terms, certain problems emerged over time in the form of indiscriminate and
imbalanced use of fertilisers, significant regional variability in consumption, and high burden
of subsidies. To present study attempts to analyse these problems by examining the temporal
and spatial trends in fertiliser production, consumption and imports in India, reviewing the
existing fertiliser marketing system, analysing the changes in the fertiliser distribution system
and examining the impact of fertiliser pricing policies on their consumption. Analysis of the
time series data on fertiliser production capacity in the country revealed that during the
eighties there was a rapid increase in production capacity of nitrogenous and phosphatic
fertilisers. Consequently, production of N and P2O5 increased rapidly and growth in
production was found to be highest during the decade 1981-82 to 1990-91. The production
growth was found to be generally higher in case of nitrogenous fertilisers, indicating the
tendency of farmers to use large quantities of nitrogenous fertilisers, chiefly urea. In the
nineties, efforts were made to induce balanced use of fertilisers among cultivators and during
this period growth in consumption of phosphatic fertilisers was highest. A generally declining
trend in instability in production was observed. Urea is the major nitrogenous fertiliser
produced in the country. Its production grew at an annual compound rate of 4.61 per cent
during 1981-82 to 2010-11 in the country as a whole. A rapid increase in the consumption
was evident after 1965-66 in case of all three nutrients. However, the trend lines showed a
high degree of inter-year variability in consumption of P2O5 and K2O as compared to N. Interregional
and inter-state comparisons revealed that total per hectare NPK consumption was
highest for the Southern region followed by the Northern region. The same pattern was
observed for phosphatic and potassic fertilisers. However, in case of nitrogenous fertilisers,
per hectare consumption was highest in the Northern region followed by the Southern region.
Across different size categories of farms, per hectare consumption was highest in case of
marginal farmers which nullifies the commonly held belief that large farmers use more
fertilisers. India supplements its domestic fertiliser production of N and P2O5 and meets its
entire requirement of P through imports. During 1981-82 to 2010-11, total fertiliser imports
grew annually at 3.65 per cent. Over time India has expanded its import base and it now
imports from a larger number of countries which has imparted some degree of flexibility. The
Government plays an important role in fertiliser marketing, distribution and pricing. To
promote and expand fertiliser use in the country, fertilisers have been subsidised. Distribution
has been managed through predetermined ECA allocations of different producers to different
states under the Fertiliser Movement Control Order. Different price policies such as the
Retention Price Scheme and New Pricing Scheme have been implemented from time to time.
While these policies have helped to keep fertiliser prices favourable for the farmers, they have
increased the subsidy burden and also led to imbalanced use of fertilisers. Thus the subsidy
policy was changed to nutrient based subsidy. A positive aspect of the distribution system in
the country is the increasing role of the private retailers in fertiliser trade. The density of retail
outlets shows that the number of private retail outlets per ten thousand hectares of gross
cropped area is increasing over time and is greater than the density of cooperative outlets.
Correlations analysis between number of retail outlets (cooperative, private and total) and
total fertiliser consumption, gross cropped area and gross irrigated area showed significant
positive coefficients in almost all the states. In case of cooperative outlets, the correlation
coefficients were significant for fewer states and the magnitude of the coefficients was also
 
Date 2016-03-18T17:56:02Z
2016-03-18T17:56:02Z
2013
 
Type Thesis
 
Identifier http://krishikosh.egranth.ac.in/handle/1/65270
 
Language en_US
 
Format application/pdf
 
Publisher IARI, DIVISION OF AGRICULTURAL ECONOMICS INDIAN AGRICULTURAL RESEARCH INSTITUTE NEW DELHI