Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

The Fertilizer sector in India- Vijay Paul Sharma

2,432 views

Published on

Published in: Business, Technology
  • Be the first to comment

The Fertilizer sector in India- Vijay Paul Sharma

  1. 1. Role of Fertilizers in Transforming Agriculture in Asia: A Case Study of India Vijay Paul Sharma, Professor & Chair Indian Institute of Management Ahmedabad, India Email: vijays@iimahd.ernet.in Paper presented in the Conference on "Agricultural Transformation in Asia: Policy Options for Food and Nutrition Security" organized by IFPRI and CDRI on September 25-27 in Siem Reap Province, Kingdom of Cambodia
  2. 2. Presentation Outline Key Trends in Fertilizer Use Market Structure and Supply-side Issue The Pricing and Subsidy Environment The Way Forward Vijay Paul Sharma
  3. 3. KEY TRENDS IN FERTILIZER USE Vijay Paul Sharma
  4. 4. Overview of Indian Fertilizer Market  3rd Largest Producer & 2nd Largest Consumer Production: 16.65 million tonnes in 2011-12 (CAGR 1.3% during 2000s) Consumption: 27.79 Million Tonnes in 2011-12 (>6%) RISING IMPORTS??? <2 million tonnes in 2002-03  12.4 million tonnes in 2011-12 Largest Importer of Rock Phosphate & Phosphoric Acid and 2nd Largest Importer of Ammonia Vijay Paul Sharma
  5. 5. Urea 50% DAP 19% NP/NPK 16% MOP 9% SSP 5% AS/CAN 1% Share of Fertilizer Products in India Vijay Paul Sharma Source: FAI (2012)
  6. 6. Total Consumption: ed from <1 million tonnes in mid-1960s to 28.1 million tonnes in 2010-11  27.8 million tonnes in 2011-12 Per ha Consumption: ed from <10 kg in mid-1960s to 146.3 kg in 2010-11 144.6 kg in 2011-12 Vast Regional Variations 104.1 kg/ha in West to 215.5 kg in South 56.5 kg/ha in Odisha to 266.1kg in A.P. & 243.6 kg in Punjab Fertilizer Consumption Trends Vijay Paul Sharma
  7. 7. Relatively Low Fertilizer Use in India 0 100 200 300 400 500 Japan China France BangladeshPakistan Sri Lanka USA India World 212.5 400.3 176.8 224 184.7 135.8 121.2 165.8 112.7 Kg/haofarablelandincluding permanentcrops Vijay Paul Sharma Source: FAI (2012)
  8. 8. Consumption TE 1989-90 TE1999-00 TE2011-12 Above 200 5 (1.4%) 31 (6.6%) 135 (25.4%) 150-200 21 (5.7) 45 (9.6) 77 (14.5) 100-150 42 (11.4) 94 (20.0) 115 (21.6) 75-100 46 (12.5) 62 (13.2) 57 (10.6) 50-75 70 (19.0) 78 (16.6) 59 (11.1) 25-50 85 (23.1) 80 (17.1) 55 (10.3) <25 99 (26.9) 79 (16.8) 35 (6.5) Distribution of Districts according to Fertilizer use (kg/ha) in India Vijay Paul Sharma Source: FAI (2012)
  9. 9. All India Plant Nutrient Consumption Ratio Year N P2O5 K2O 1981-82 6.0 1.9 1 1991-92 6.0 2.9 1 1992-93 9.5 3.2 1 2000-01 6.8 2.6 1 2002-03 6.5 2.5 1 2008-09 5.3 2.3 1 2009-10 4.3 2.0 1 2010-11 4.7 2.3 1 2011-12 6.5 2.9 1 Vijay Paul Sharma Partial decontrol of Fertilizers in 1991- 92 and 2010-1 Source: FAI (2012)
  10. 10. Declining Fertilizer Response - Irrigated Areas 0 2 4 6 8 10 12 14 16 1970 1975 1980 1985 1990 1995 2000 2005 Responseratio(kggrain/kg NPK) Source: Biswas and Sharma (2008)
  11. 11. MARKET STRUCTURE AND SUPPLY SIDE ISSUES Vijay Paul Sharma
  12. 12. Changing Market Structure 145 Fertilizer Plants 29 Urea, 19 DAP and NP/NPK Complex, 1 CAN, 85 SSP, 1 Ammonium Chloride & 10 Ammonium Sulphate Rising Share of Coops & Pvt. Sector in Fertilizer Production Imports: N Canalised; P&K Decontrolled Vijay Paul Sharma Sector N (%) P (%) 1981 2011 1981 2011 Public 60.0 25.9 45.6 5.4 Private 29.6 46.8 37.8 64.1 Coops 10.4 27.3 16.7 30.5 Source: FAI (2012)
  13. 13. Stagnation in Domestic Production 10.9 N 12.3 3.7 P2O5 4.4 0 2 4 6 8 10 12 14 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Production(milliontonnes) N P Vijay Paul SharmaSource: FAI (2012)
  14. 14. 1.41 N 32.20 9.40 P2O5 53.90 0 10 20 30 40 50 60 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 ShareofImports(%) Consumption vis-à-vis Imports: Rising Dependence on Imports Vijay Paul Sharma Source: FAI (2012)
  15. 15. Level of Self-Sufficiency N 98.7 67.8 P2O5 94.3 46.1 40 60 80 100 1971-72 1981-82 1991-92 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008.09 2009-10 2010-11 2011-12 % Vijay Paul Sharma Source: FAI (2012)
  16. 16. Fertiliser Pricing Policy and Subsidy Environment Vijay Paul Sharma
  17. 17. 1. Pre-Retention Price Scheme (RPS) Period (Up to mid-1970s) 2. RPS Era and Beyond (Late-70s to Early-90s) 3. Post-Economic Reforms (1990s & 2000s)  Decontrol of Phosphatic & Potassic Fertilizers  Introduction of Concession on Decontrolled Fertilizers  New Pricing Scheme for Urea  Nutrient Based Subsidy (NBS) – Urea Excluded  Decontrol of Phosphatic & Potassic Fertilizers  Direct Transfer of Fertilizer Subsidy to Farmers 1990s 2000s Fertilizer Sector Policy Evolution
  18. 18. Key Concerns  Decontrol of P & K Fertilizer Prices - Fixed Subsidy & Floating Farm Gate Price  Very Significant Increase in Prices (DAP: Rs. 9350/MT in 2010 to Rs. 24000 in 2012; MOP: Rs. 4455 to Rs. 12000)  Reduction in Consumption of P&K Imbalanced Use  Urea Still under Govt. Control: No Significant Change in Price (Rs.5350/MT) for Many Years  Steep Increase in Subsidy Bill  Regulation of Movement & Distribution Controls  Urea - 50% and Decontrolled Fertilizers – 20% Vijay Paul Sharma
  19. 19. Burgeoning Fertilizer Subsidy Vijay Paul Sharma 0 2 4 6 8 10 0 20000 40000 60000 80000 100000 120000 1990-91 1993-94 1996-97 1999-00 2002-03 2005-06 2008-09 2011-12 %ofAgri.GDP Rs.crore Fertilizer Subsidy % to GDP Agri. Source: GoI (2013)
  20. 20. Economics of Fertilizer Use 0 1 2 3 4 5 6 N P Kgofrice/kgnutrient 1981-82 1991-92 1992-93 2001-02 2011-12 Vijay Paul Sharma Source: FAI (2012)
  21. 21. Likely Impact of Fertilizer Subsidy Withdrawal  Small and Marginal Farmers likely to be hurt  Marginal Farmers (190 kg/ha) vs Large Farmers (117 kg/ha)  High Input Costs vs High Output Prices Debate – Small and Marginal Farmers either Self-sufficient or Small Marketed Surplus  Farm Income to Decline Dramatically if Fertilizer Subsidy is Withdrawn Completely Vijay Paul Sharma
  22. 22. The Way Forward  Role of Fertilizers still Important but Need to Address Some Concerns  Increasing Dependence on Imports: Volatile World Markets  Declining Fertilizer Use Efficiency  Regional Disparities in Fertilizer Use  Consistent Long-term Policy to attract Investment in the Sector  Address Subsidy and Pricing Issue to Promote Balanced Use of Nutrients  Better Targeting of Subsidies without Compromising Food Security Concerns Vijay Paul Sharma
  23. 23. Vijay Paul Sharma

×