Later, in February 1997, it further hiked the subsidy on DAP by another Rs 750 per tonne and also increased subsidy of other products proportionately. However, the decision was implemented late in April that year, which resulted in holding back of the stocks during March that year and build up for kharif was to that extent affected.

On 29th January 1998, the government further announced a reduction of Rs 250 per tonne in the subsidy of DAP and made it retrospectively effective from October 1997. The manufacturers and suppliers had already committed the sales in previous four months and lost heavily. This affected the stocking and supply of DAP and other complexes in February-March' 98 period which in turn undermined theavailability of these products in kharif'98.

In the Budget of 1998, an increase in urea price by Rs 1000 per tonne was announced. It was reduced to Rs 500 on the next day and government circulars were issued to immediate effect. Still for couple of weeks in peak season uncertainty prevailed in the market and urea sales were affected. The increase of Rs 500 per tonne was subsequently withdrawn but damage had already been done and farmers could not buy urea in the peak season.The government again on 28th August 1998 announced new policy of increasing the subsidy of DAP by Rs 500 per tonne and those of other product even by bigger margin but gave effect to this from October this year. The other major policy change was that the manufacturers and suppliers would be free to fix their own farmers prices without the centre or state government participating in it. As it did 1996, the government should have asked manufacturers/suppliers to announce their new prices within three to five days. The delay inimplementation of the policy by 33 days affected the supplies in September, very crucial time for rabi season.

Many manufacturers have not supplied material in September. Most of them had slowed down the sales. On 23rd september 1998, the government reversed the decision and the prices for DAP and complex fertiliser as well as potash were fixed at the same level of kharif'98 without announcing any increase in subsidy levels.

The prices of SSP were not announced and these are left to the state governments to decide.

The point which must be understood is that prevailing uncertainty is playing havoc with availability of various products. Import of DAP and MOP have been deferred or cancelled. The demand for phosphatic fertilisers would be extremely high in October/November/December due to rains. An increase of 15 to 20 per cent in consumption of phosphate and potash can be expected.A few lessons emerge from the above-mentioned facts. First lesson is that any decision taken about price or subsidy must beimplemented immediately. Second lesson is that any decision which is already announced in the market and implemented, must not be withdrawn hastily without giving it a full and fair trail.

The third lesson from this analysis which policy makers will have to understand is that price of fertiliser product is no doubt an important factor in increasing its consumption but other parameters including good quality of the product, timely availability and stocking well ahead of the season particularly in the interior areas are also equally important aspects which make or mar the consumption levels.

Those who are worried about the price as factor affecting the consumption must note that in 1991-92, the market price of DAP was Rs 4860 per tonne and in 1997-98, it was Rs 8300, an increase of Rs 3440 per tonne or Rs 172 per bag of DAP in six years. Yet, the farmers of India showed a record consumption of 5.2 million tonne of DAP in 97-98.

Similarly the price of urea of Rs 3660 per tonne, though very attractive inrelation to phosphatic fertiliser products, is a higher price than what prevails in neighbouring countries. Even then 19 million tonnes of urea was purchased by farmers in 97-98.

The price of SSP in 1991-92 was Rs 1240 per tonne and consumption was three million tonne in 1997-98, the average price of SSP in market was Rs 2750 per tonne and consumption level was 3.6 million tonne. There is absolutely no doubt that consumption level of various fertilisers can be sustained at fairly high levels even if DAP price becomes Rs 6500 and SSP Rs 4500 in the next 3 to 4 years in a phased manner.

It is time one realises the need to have consistent policy for pricing and subsidy of fertiliser product. We need to implemented it on a long term basis of say 18 months to 24 months as was attempted in August 1998 but withdrawn in September 1998. We must also realise that we cannot go on subsiding fertiliser and will have to increase market price in a phased manner and keep the subsidy pegged at certain levels or help buildan indigenous fertiliser industry.

(The author is the director of Rama Phosphate Ltd)