GoM decisions to script change in fert sector

Written by Sanjay Jog | Mumbai, Oct 29 | Updated: Oct 30 2007, 04:33am hrs
In what could script a turnaround story for the ailing fertiliser industry, the group of ministers (GoM), which met recently, has taken a slew of decisions. Among the major decisions, products coated with micro-nutrients will be recognised under subsidy/concession schemes. The cost of coating micro-nutrients like zinc, boron and neem can be recovered from farmers within a certain percentage of maximum retail price.

Industry sources told FE that Sulphur, which is recognised as a major nutrient and at par with NPK ((Nitrogen, Phosphorous, and Potash (Potassium)), needed to be promoted under the subsidy/concession scheme. The department of fertiliser (DoF) will work out a scheme in this regard. There will be nutrient-based subsidy, instead of product-based subsidy. For this, subsidy per unit of N be derived from urea; subsidy per unit of P be derived from imported di-ammonium phosphate (DAP) - after adjusting the price of N derived from urea; and K from imported muriate of potash (MOP). The DoF will chalk out the details in this regard.

The GoM is of the view that SSP, which contains sulphur besides Phosphorus (P2O5), would be promoted and it should have subsidy linked to international prices of rock phosphate and sulphur. Production of micro-nutrients, which is reserved for small-scale sector, would be opened for manufacture by the fertiliser industry to ensure its quality and availability for agriculture.

Further, NPK complexes, which give balanced fertilization, would be promoted. The farmers would be charged the same price of per unit NPK as in Urea, di-ammonium phosphate, and muriate of potash (MOP) respectively. The DOF would work out scheme in this regard. All products included in Fertiliser Control Order (FCO) be brought under subsidy/ concession scheme, including water soluble fertilizers.Since large number of products would qualify for subsidy/concession an independent Regulatory Authority similar to Regularity Authorities in other sectors would be set up.

The GoMs recommendations are quite crucial. Although the rise in urea consumption during 2007-08 over the 2002-03 is 36.02%, the increase in the urea subsidy bill during the same period is 255%. Similarly, for P&K fertiliser, though the increase in consumption is 49.05%, the increase in the subsidy bill is 530%.

The DoF noted that 88% of the increase is due to the increase in the cost of inputs and consequent increase in the delivered cost. Thus, the subsidy per for tonne urea and P&K fertilisers has gone up to 61%, 175% for DAP and 128% in the case of MOP in 2006-07, against 2002-03.

Further, the response ratio of fertilisers is gradually coming down due to imbalance use of NPK fertilisers, neglect of sulphur and micro-nutrients, deterioration of soil health, decrease in organic carbon content in the soil etc.