Fertilizers.ppt

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Fertilizers Policy
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Fertilizers are organic or inorganic substances
containing chemical elements that improve the
growth of plants and the fertility of the soil.

• Fertilizer Classification
• Straight Fertilizer One major nutrient- Urea.
• Binary Fertilizer Two major nutrients- Potassium
  Nitrate.
• Tertiary Fertilizer Three major nutrients-
  Ammonium Potassium Phosphate.
• Compound/Complex Fertilizer Chemically contains
  at least 2 major nutrients- Nitrophosphate.
• Mixed Fertilizer Physically (Blend of
  Fertilizers)contains at least 2 major nutrients-
  Nitrophosphate and Potash (151515)
• Complete Fertilizer Contains all 3 major
  nutrients.
• Incomplete Fertilizer Other than Complete
  fertilizers.
• Low Analysis Fertilizer Less than 25 of primary
  nutrients-SSP(16 P2O5)
• High Analysis Fertilizer More than 25 of
  primary nutrients-Anhydrous Ammonia (82.2 N)
• Fertilizer Ratio Relative percent of NP2O5K20
  (421)

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Share of India in the World Fertilizer Production
in 2007-08 (Percent)
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Share of India in World Fertilizer Imports in
2008 (Percent)


Source FAOSTAT FAO Statistics Division 2011
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Top World Fertilizer Consuming Country (Percent)


Source Fertilizer Statistics 2008-09
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ZONE-WISE PRODUCTION OF FERTILIZERS (NUTRIENT-WISE) 2008-09 (thousand tonnes) ZONE-WISE PRODUCTION OF FERTILIZERS (NUTRIENT-WISE) 2008-09 (thousand tonnes) ZONE-WISE PRODUCTION OF FERTILIZERS (NUTRIENT-WISE) 2008-09 (thousand tonnes) ZONE-WISE PRODUCTION OF FERTILIZERS (NUTRIENT-WISE) 2008-09 (thousand tonnes) ZONE-WISE PRODUCTION OF FERTILIZERS (NUTRIENT-WISE) 2008-09 (thousand tonnes) ZONE-WISE PRODUCTION OF FERTILIZERS (NUTRIENT-WISE) 2008-09 (thousand tonnes)
  Zones N P2O5 (N P2O5) (N P2O5)
East East 583.20 (5.35) 965.60 (28.26) 965.60 (28.26) 1548.80 (10.82)
North North 3682.00 (33.78) 34.70 (1.02) 34.70 (1.02) 3716.70 (25.96)
South South 1538.30 (14.11) 848.60 (24.83) 848.60 (24.83) 2386.90 (16.67)
West West 5096.80 (46.76) 1568.50 (45.90) 1568.50 (45.90) 6665.30 (46.55)
All India All India 10900.30 (100.00) 3417.40 (100.00) 3417.40 (100.00) 14317.70 (100.00)
Source Fertilizer Statistics published by The Fertilizer Association of India, New Delhi. Where as, N nitrogenous fertilizer, and P2O5 Phosphatic fertilizer Figures in parentheses showed the percentage of all India, green figures shows lowest and red figures shows highest values Source Fertilizer Statistics published by The Fertilizer Association of India, New Delhi. Where as, N nitrogenous fertilizer, and P2O5 Phosphatic fertilizer Figures in parentheses showed the percentage of all India, green figures shows lowest and red figures shows highest values Source Fertilizer Statistics published by The Fertilizer Association of India, New Delhi. Where as, N nitrogenous fertilizer, and P2O5 Phosphatic fertilizer Figures in parentheses showed the percentage of all India, green figures shows lowest and red figures shows highest values Source Fertilizer Statistics published by The Fertilizer Association of India, New Delhi. Where as, N nitrogenous fertilizer, and P2O5 Phosphatic fertilizer Figures in parentheses showed the percentage of all India, green figures shows lowest and red figures shows highest values Source Fertilizer Statistics published by The Fertilizer Association of India, New Delhi. Where as, N nitrogenous fertilizer, and P2O5 Phosphatic fertilizer Figures in parentheses showed the percentage of all India, green figures shows lowest and red figures shows highest values Source Fertilizer Statistics published by The Fertilizer Association of India, New Delhi. Where as, N nitrogenous fertilizer, and P2O5 Phosphatic fertilizer Figures in parentheses showed the percentage of all India, green figures shows lowest and red figures shows highest values
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ZONE-WISE CONSUMPTION OF NUTRIENTS PER UNIT OF GROSS CROPPED AREA IN 2008-09 (kg/ha) ZONE-WISE CONSUMPTION OF NUTRIENTS PER UNIT OF GROSS CROPPED AREA IN 2008-09 (kg/ha) ZONE-WISE CONSUMPTION OF NUTRIENTS PER UNIT OF GROSS CROPPED AREA IN 2008-09 (kg/ha) ZONE-WISE CONSUMPTION OF NUTRIENTS PER UNIT OF GROSS CROPPED AREA IN 2008-09 (kg/ha) ZONE-WISE CONSUMPTION OF NUTRIENTS PER UNIT OF GROSS CROPPED AREA IN 2008-09 (kg/ha) ZONE-WISE CONSUMPTION OF NUTRIENTS PER UNIT OF GROSS CROPPED AREA IN 2008-09 (kg/ha)
Zones Zones N P2O5 K2O (NP2O5K2O)
East East 64 27 22 113
North North 124 38 9 170
South South 99 51 40 190
West West 51 27 10 88
  All India 78 34 17 129
Source Fertiliser Statistics published by The Fertilizer Association of India, New Delhi.Where as, N nitrogenous fertilizer, P2O5 Phosphatic fertilizer and K2O Potassic fertilizers green figures shows lowest and red figures shows highest values Source Fertiliser Statistics published by The Fertilizer Association of India, New Delhi.Where as, N nitrogenous fertilizer, P2O5 Phosphatic fertilizer and K2O Potassic fertilizers green figures shows lowest and red figures shows highest values Source Fertiliser Statistics published by The Fertilizer Association of India, New Delhi.Where as, N nitrogenous fertilizer, P2O5 Phosphatic fertilizer and K2O Potassic fertilizers green figures shows lowest and red figures shows highest values Source Fertiliser Statistics published by The Fertilizer Association of India, New Delhi.Where as, N nitrogenous fertilizer, P2O5 Phosphatic fertilizer and K2O Potassic fertilizers green figures shows lowest and red figures shows highest values Source Fertiliser Statistics published by The Fertilizer Association of India, New Delhi.Where as, N nitrogenous fertilizer, P2O5 Phosphatic fertilizer and K2O Potassic fertilizers green figures shows lowest and red figures shows highest values Source Fertiliser Statistics published by The Fertilizer Association of India, New Delhi.Where as, N nitrogenous fertilizer, P2O5 Phosphatic fertilizer and K2O Potassic fertilizers green figures shows lowest and red figures shows highest values
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ZONE-WISE CONSUMPTION RATIO OF N P2O5 K2O (IN 2008-09) ZONE-WISE CONSUMPTION RATIO OF N P2O5 K2O (IN 2008-09) ZONE-WISE CONSUMPTION RATIO OF N P2O5 K2O (IN 2008-09) ZONE-WISE CONSUMPTION RATIO OF N P2O5 K2O (IN 2008-09)
NP2O5K2O NP2O5K2O NP2O5K2O
Zone N P2O5 K2O
East 2.9 1.2 1.0
North 14.6 4.5 1.0
South 2.5 1.3 1.0
West 5.0 2.6 1.0
All India 4.6 2.0 1.0
Source Fertiliser Statistics published by The Fertilizer Association of India, New Delhi. Where as, N nitrogenous fertilizer, P2O5 Phosphatic fertilizer and K2O Potassic fertilizers and green figures show lowest and red figures shows highest values and purple showed nearby optimum ratio (421). Source Fertiliser Statistics published by The Fertilizer Association of India, New Delhi. Where as, N nitrogenous fertilizer, P2O5 Phosphatic fertilizer and K2O Potassic fertilizers and green figures show lowest and red figures shows highest values and purple showed nearby optimum ratio (421). Source Fertiliser Statistics published by The Fertilizer Association of India, New Delhi. Where as, N nitrogenous fertilizer, P2O5 Phosphatic fertilizer and K2O Potassic fertilizers and green figures show lowest and red figures shows highest values and purple showed nearby optimum ratio (421). Source Fertiliser Statistics published by The Fertilizer Association of India, New Delhi. Where as, N nitrogenous fertilizer, P2O5 Phosphatic fertilizer and K2O Potassic fertilizers and green figures show lowest and red figures shows highest values and purple showed nearby optimum ratio (421).
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Trends In Subsidy
Although Fertilizer prices were controlled from
1943 but there was no subsidy burden till early
70s (RPS introduced in 1977). This change was due
to first oil price shock in 1973-74 (Desai 1993,
Gulati and Narayanan 2003)
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Interesting Points
High degree of correlation between fertilizer
consumption and food production. High degree of
correlation between lower fertilizer price and
increased consumption.

• Concession Scheme.
• Given to decontrolled fertilizer P K
  fertilizer.
• The difference between the total delivered costs
  of the fertilizer at the farm gate
• and the MRP payable by the farmers is given by
  the Government of India as
• Concession to the farmers and paid to the
  fertilizer manufactures/importers.

• Control/Decontrol
• Canalized/Decanalised
• Subsidy/Concession

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Fertilizer Policy Snapshot
Year Name of Policy or Committee Authority/Head Main features and recommendation
1944 Central Fertilizer Pool GOI Equitable distribution of all fertilizers (domestic and imported)
1957 Fertilizer Control Order (FAO) GOI Fertilizers came under the Essential Commodity Order (ECA)
1965 Committee on Fertilizers Sh. B. Sivaraman Laid the foundation regarding production, promotion, distribution, and consumption of fertilizers in the country
1966 Liberalization of Fertilizer Marketing GOI The manufacturers were given freedom to market up to 50 percent of their production
1969 Liberalization of Fertilizer Marketing GOI Domestic manufacturers were given complete freedom in marketing.
1972 Half-Yearly Zonal Conferences GOI All the fertilizers were distributed by the manufacturers according to their ECA allocation during the two cropping (Kharif and Rabi) seasons
1973 Fertilizer Movement Control Order (FMCO) GOI Fertilizers distribution and its inter-state movement under Government control
1975 Price Policy GOI The administered prices of fertilizers declined in this year to maximise the consumption.
1977 Fertilizer Prices Committee(RPS) Sh. S. S. Marathe Retention Price Scheme (RPS) was introduced for various fertilizers (nitrogenous fertilizers except ammonium chloride)
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RETENTION PRICE SCHEME

• The RPS was first introduced for nitrogenous
  fertilizers in November, 1977
• Under this scheme, each fertilizer unit is
  awarded an ex-factory price (12
  Profit after tax) based on the prescribed
  norms. The norms are fixed with respect to
  capacity utilization and also consumption of
  inputs. This ex-factory price is referred to as
  Retention Price.
• The sale prices of controlled fertilizers are
  fixed by the Government of India (Department of
  Agriculture Cooperation) under the Fertilizer
  (Control) Order, 1985(FCO), issued under the ECA,
  1955 (Hoarding,distributn,adulteration, MRP etc.)
• This was extended to PK(Not SSP) in Feb 1979 but
  later decontrolled in Aug 1992.
• 330 daysoperation80-90 capacity.
• RPS resulted in proving and claiming cost rather
  than control and efficiency enhancement.
• 1997 C.H Hanumantha Rao Committee suggested
  uniform normative referral price different for
  gas based and naphtha based plants.
• .

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Fertilizer Policy Contd..
Year Name of Policy or Committee Authority/Head Main features and recommendation
1979 FPC (RPS) Sh. S. S. Marathe RPS for PK fertilizer was introduced (Except SSP)
1980 Decontrol of Fertilizers GOI The prices of Ammonium Sulphate (AS) and Calcium Ammonium Nitrate(CAN) were decontrolled
1980 Block Delivery Scheme GOI The reimbursement of secondary freight from railhead to the block headquarters
1980 Price Policy GOI To overcome the expenses on secondary freight in BDS the price of fertilizers was raised by the Government in this year.
1982 Price Policy GOI The Government reduces the prices of fertilizers by 7.5 percent.
1982 FPC (RPS) GOI RPS for SSP (Single Super Phosphate)
1985 FPC (RPS) GOI Ammonium Chloride was brought under RPS
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Fertilizer Policy Contd..
Year Name of Policy or Committee Authority/Head Main features and recommendation
1986 HPC of Secretaries Sh. B. B. Singh Recommended for group RPS based on feedstock and than shift to uniform price.
1987 High Powered Committee on Fertilizer Consumer Prices Dr. G. V. K. Rao Systematic development of dry lands, soil testing labs, incentives for fertilizer promotion, monitoring fertilizer use efficiency, strengthening of credit, abolition of sales tax, etc. to raise prices by 5-7 percent and predicted a increase of 30 percent in consumption by next 3 years.
1987 ECA free Allocation GOI Free Allocation of Specific Quantities of Fertilizer for Rabi (1987-88) and Kharif (1988). No reimbursement of extra freight cost involved over and above the normal freight under ECA allocation
1988 Revision of Price Control (RPS) GOI The Government of India revised the Price Control of fertilizers w.e.f. April 1988 and Reduced the retention prices and subsidies for nitrogenous fertilizer
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ISSUES AND CONCERNS

• Stagnation in domestic production.
• Imports at exorbitantly high prices.
• Consequent increase in amount of subsidy.
• Imbalance in fertilizer use.
• Depletion in soil health causing decline in crop
  response to fertilizer use. Most of the Policies
  oriented towards containing fertilizer subsidy.
• Subsidies kept on increasing due to - Stagnant
  retail prices (particularly from 2002-03) - Steep
  increase in cost of feedstock/ raw materials/
  intermediates.

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Fertilizer Policy Contd..
Year Name of Policy or Committee Authority/Head Main features and recommendation
1991 Dual Pricing GOI Fertilizer prices increased by 30 percent exempting small and marginal farmers (up to 2 hectares) states were allocated funds based on area and average consumption. Discontinued on March 1992.
1991 Decontrol of Fertilizers GOI The prices of AS and CAN were decontrolled
1992 JPC on Fertilizer Pricing Pratap R Bhosale ( L.S . M.P) Studied the ways to reduce subsidy. Reasons- input price rise was not reflected in farm gate prices. Decontrol on price and distribution of the P and K fertilizers along with a marginal 10 percent decrease in the price of urea. Incentives for fertlizer industry optimisation.
1992 Decontrol of Fertilizers GOI Decontrol of prices, movement and distribution of all P and K fertilizers
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Fertilizer Policy Contd..
Year Name of Policy or Committee Authority/Head Main features and recommendation
1992 De-Canalization of DAP GOI Import of DAP was decanalised
1992 Concession on Decontrolled Fertilizers GOI Ad hoc concession of Rs. 1000 per tonne each for DAP and MOP, and Rs. 435 999 per tone for NP/NPK fertilizers, revised from time to time
1993 De-Canalization of MOP GOI Import of MOP was decanalised
1993 Concession on SSP GOI Ad hoc concession on SSP
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Fertilizer Policy Contd..
Year Name of Policy or Committee Authority/Head Main features and recommendation
1994 Decontrol of Fertilizers GOI The prices of AS and CAN ACl were decontrolled
1995 Price Policy GOI The price rise of P K fertilizers and reduction in price of N fertilizers
1998 High Powered Fertilizer Pricing Policy Review Committee Prof. C. H. Hanumantha Rao A uniform NRP be fixed for existing gas based urea and DAP units with discontinuing the unit based RPS for urea, and a Feedstock Differential Cost Reimbursement could be given for a period of five years for non-gas based units
2000 Expenditure Reforms Commission (Erc) Sh. K. P. Geethakrishnan Expenditure reform commission suggested 7 annual increase in MRP so that by 2006 domestic price will become equal to international prices. Tradable coupons (every cultivator household could be given tradable coupons with which it can purchase 120 Kg of fertilizers (80 Kg of urea, 30 Kg of phosphatic and 10 Kg of potassic at a specified subsidy. The remaining fertilizer has to be bought in the open market at a higher price) and increase in purchasing power of people in rural areas by employment generating schemes
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Fertilizer Policy Contd..
Year Name of Policy or Committee Authority/Head Main features and recommendation
2002 New Pricing Scheme for Urea Units (NPS) (1st and 2nd Stage) GOI A group based concession. Phased decontrol of movement, distribution and sale of urea, for Kharif 2003, 75 percent under ECA of urea manufacturer and 25 percent could be sold freely anywhere in the country For Rabi 2003-04 the ratio was 5050. The scheme is still continuing. Freight subsidy was same as previous for sold under ECA and reduced by Rs.100/ tonne for remaining urea.
2004 Cost price study of SSP Cost Accounts Branch (CAB) The Government enhanced the concession on SSP from Rs.650 per tonne to Rs.975 per tonne w.e.f. 1st September, 2005 on an adhoc basis
2005 Phosphatic Fertilizer Policy Prof. Abhijit Sen The subsidy on phosphatic and complex fertilizers based on DAP .
2005 Task Force on Balanced Use of Fertilizers Sh. A. K. Singh To increase the P K consumption and reduce the use of N, application. Nutrient application on the basis of soil, crops and climate, extension of subsidy to other secondary and micro nutrients. Adjustment of pricing and subsidy on nutrient basis. The recommendations of the report have been accepted in principle.
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Fertilizer Policy Contd..
Year Name of Policy or Committee Authority/Head Main features and recommendation
2007 New Pricing Scheme for Urea Units (NPS) (3rd Stage) GOI Conversion of all urea units to gas based within 5 years. Policy for setting joint ventures abroad. Movement still controlled for 50 percent of production of urea. A buffer stock through the state up to a limit of 5 percent of their seasonal requirement.
2007 Concession on Decontrolled Fertilizers GOI MAP was bought under concession, there was no concession given for processing of granulated MAP.
2007 Cost Price Study of DAP, Complex Fertilizers and MOP Tariff Commission Various costs including interest on delayed concession payments by Government were considered in this policy.
2008 Production and Use of Customized Fertilizers GOI Production of customized fertilizers based on area and crop. The company should have annual turn over more than Rs. 500 crores and a capacity of 10,000 soil samples testing annually, All subsidized fertilizers can be use for manufacturing customized fertilizers and MRP shall be fixed reasonably by the company.
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Fertilizer Policy Contd..
Year Name of Policy or Committee Authority/Head Main features and recommendation
2008 Revised Concession Scheme for SSP GOI Uniform MRP throughout the country, monthly revision in the concession rates, the policy continued up to September, 2009.
2008 Policy Related to Fortified and Coated Fertilizers GOI Producers are allowed to sell the FCO approved fortified/coated subsidized fertilizers at a price of 5 percent above MRP, except zincated urea and boronated SSP, for these it is 10 percent above their MRP.
2008 Nutrient Based Pricing of Subsidized Fertilizers GOI The per unit price of nutrients N, P, K and S will be same in all the complex grade fertilizers, MRP of complex fertilizers significantly reduced in this year. The nutrient prices of urea, DAP and MOP have the benchmark for determining the prices for nutrient prices of N, P and K respectively. Sulphur recognized as a primary nutrient in concession scheme.
2008 Concession on Decontrolled Fertilizers GOI TSP and indigenous AS included under concession scheme,.
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Fertilizer Policy Contd..
Year Name of Policy or Committee Authority/Head Main features and recommendation
2008 Uniform Freight Subsidy GOI Uniform freight subsidy policy applicable on all subsidized fertilizers under NPS (New Pricing Scheme) for urea and the concession scheme on P K fertilizers. Uniform freight for transportation of fertilizers to the fertilizer companies from plant/port up to the block level based on Actual railway freights and average lead distance of all the blocks in the district and the state level truck rates from rake point to the block. State Government is responsible for confirming the receipts as per movement plan of fertilizers plan in FMS.
2008 Policy for New Investments in Urea Sector GOI Additional urea production from expansion and revived units of HFC and FCI. Incentives and tax benefits for the coal gasification based urea projects.
2009 Concession for SSP GOI ad hoc concession of Rs.2000/ tonne for SSP.
2011 Feedstock Policy GOI For establishment of new plant using gas as feedstock. Indigenous manufacturers using naphtha as feedstock were given subsidy to compensate for higher production cost for two years up to March 31,2012. Such units have to convert their plants from naphtha to gas or import ammonia thereafter.
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Nutrient Based Subsidy
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Thank You