In his presentation at the Paradeep Phosphate Ltd's marketing convention in the capital, Fertiliser Association of India marketing director SK Saxena has pointed out that in the absence of a concrete marketing plan, there is the possibility of many units stampeding into high potential areas and neglecting those with lesser demand.

To avoid such a situation, the industry should evolve a self-regulatory mechanism to avoid too many operators in an area or state hampering each other's business. A compact market structure has to be created for each unit and specific responsibility for efficient supply system and fair price should be entrusted to the lead manufacturer. According to Saxena, there will be a pressure on cutting down costs especially that of freight and warehousing as they account for 82 per cent of the total selling and distribution cost.

It will be in the long-term interest of the industry as a whole to arrive at the most economical demarcation of the marketing area of each company, Saxena added. "Demarcation of territories of each company should take care of continuity, consistency and scope for growth." Saxena suggested that to ensure price discipline and to avoid unnecessary competition, districts should become the focus of attention instead of states.

Fertiliser demand from the existing and potential markets has to be realistically estimated from year to year and season to season for proper distribution planning, Saxena said. Fertiliser availability on a continuous basis is to be planned and a rational movement plan at minimum cost is to be worked out.

A phased programme of withdrawal by manufacturers operating in uneconomic zones has to be brought about in the context of new production capabilities coming up in certain areas.

In the free market scenario, inter-modal mix in transportation would undergo changes, Saxena pointed out. There could be problems in the transportation of fertilisers by rails due to several constraints within which the railways operate. The average lead for rail transportation will drop and correspondingly road leads may go up.

A need would arise for de-hiring warehousing space from the existing locations and hiring of additional warehousing space in the changed distribution pattern. There has to be bilateral agreements between fertiliser companies in the matter of distribution, number of sales point, staff deployment etc.

A greater emphasis has to be laid on the fertiliser use efficiency aspect, said Saxena. He said that in order to ensure that farmers continue to use fertiliser despite the hike in prices, they will have to be educated on the economics of fertiliser use. As the entire mechanics of the fertiliser industry in India is going to face a transformation, it is high time that the industry wakes up, takes stock of the situation and prepares for the inevitable.