Since the roll-out of one nation, one fertiliser (ONOF) policy in January 2023, the government is estimated to have saved around Rs 2,500 crore in fertiliser subsidy because of a reduction in transportation costs of soil nutrients. The savings for the full year is expected to exceed Rs 5,000 crore.
Official sources told FE that after the government assigned fertiliser units to cater to the need of soil nutrients by the farmers in their respective geographies, the freight subsidy on account of transportation of fertilisers has come down singificantly.
“While availability of the fertiliser has improved, the reduction in freight subsidy for transportation of fertilisers have been sharp,” an official said. Earlier the companies were free to sell their soil nutrient products anywhere in the country thus incurring substantial transportation cost.
Sources said that with the fertiliser being sold under one ‘Bharat’ brand within geographical locations of the 177-odd manufacturing units, there has been substantial reduction in crisscross movement of soil nutrients. The scheme has also addressed the dilemma amongst the farmers in choosing from the plethora of fertiliser brands available in the market.
The official said that the measure was aimed at standardising fertiliser brands across the country irrespective of the company manufacturing it.
In August, last year, the government announced the ONOF policy by introducing a single brand name for urea and other fertilisers. From January 1, 2023, a common logo indicating fertiliser subsidy scheme — Pradhanmantri Bhartiya Janurvarak Pariyojna is being used in all fertiliser bags.
Fertilisers such as urea, di-amonimum phosphate (DAP), muriate of potassium (MOP) and nitrogen, phosphorus and potassium (NPK) are currently being sold by companies, state trading entities and marketing companies under the brand name Bharat urea, Bharat DAP, Bharat MOP and Bharat NPK. The name of manufacturers on the bags of soil nutrients is mentioned.
“The entire subsidy burden (on account of sale of fertilisers below cost) is borne by the government. With the new policy, fertiliser sales are freed from branding,” an official with a fertiliser company said.
Fertiliser subsidy in FY23 stood at an all-time high of 2.54 trillion, owing to the spike in global commodity prices. It was for the third year in a row, fertiliser on soil nutrients had crossed 1 trillion.
Since March, 2018, the retail urea price has remained at the current level.The scheme allows retail prices of the key soil nutrient to farmers to be kept at 242 per bag of 45 kg, even as the current cost of production is around Rs 2,200/bag.
The government announces nutrient-based subsidy rates for phosphatic and potassic fertilisers for kharif and rabi seasons annually.
In terms of volume, imports account for a third of domestic soil nutrients consumption of around 65 MT annually.
The government releases the fertiliser subsidy to manufacturers, which sell their produce to farmers through their retail chains. Since October 2016, the subsidies have been released to the farmers with the use of point of sale (PoS) devices installed at outlets. Since March 2018, beneficiaries have been identified through Aadhaar number, Kisan Credit Card and other documents.