One Nation-One Fertiliser Policy

In News

• Recently, the experts have cited that the new fertiliser branding plan must be reviewed as marketing under the single brand name of “Bharat” is ill-advised.

About One nation-One Fertiliser Policy

• The concept of One Nation-One Fertilizer (ONOF) will be implemented from October 2, 2022. 
• As part of the initiative, crop nutrients – urea, di-ammonium phosphate (DAP) or muriate of potash (MOP) will be sold under a single brand name, ‘Bharat’ irrespective of the manufacturing companies.
  • All fertilizer bags, whether containing urea or di-ammonium phosphate (DAP) or muriate of potash (MOP) or NPK will sport the brand name ‘Bharat Urea’, ‘Bharat DAP’, ‘Bharat MOP’ and ‘Bharat NPK’ irrespective of the company that manufacturers (private or public)
• The concept is brought under the Centre’s fertilizer subsidy scheme, Pradhanmantri Bhartiya Janurvarak Pariyojana (PM-BJP)
• New brand name and logo with subsidy title, Pradhanmantri Bhartiya Janurvarak Pariyojana, will occupy:
  • Two-thirds of the printable area on the bag and 
  • One-third will be used for putting details of the fertilizer companies and its symbol with other information as per the rules.
• Benefits of the scheme: 
  • A single brand name will help in the reduction of freight charges due to stopping of crisscross movement of fertilizers, 
  • Reducing the transit time, and 
  • Ensuring the availability of fertilizers throughout the year irrespective of brand preferences. 
  • It will also stop the diversion of urea for industrial purposes.
• Drawbacks of the scheme:
  • It will disincentive fertiliser companies from undertaking marketing and brand promotion activities.
  • In case of any bag or batch of fertilisers not meeting the required standards, the blame is put on the company. But now, that may be passed on fully to the government.
  • Many private players such as the Tatas and Indo Gulf Fertilisers have exited the urea business in recent years.
  • It will be difficult to spend continuously on advertisements where brand value for that company is zero.
  • A government brand will add another layer of regulation to the fertiliser manufacturing sector.
  • It also seems to impinge upon the farmers’ right to buy the products of their choice.
  • This move would serve as a disincentive for fertiliser companies to take up field programmes to introduce efficient methods of nutrient application as part of their market promotion activities.

Government’s argument on ONOF 

• Subsidy and MRP
  • The maximum retail price of urea is currently fixed by the government, which compensates companies for the higher cost of manufacturing or imports incurred by them. 
  • The MRPs of non-urea fertilisers are on paper decontrolled. 
  • But companies cannot avail of subsidy if they sell at MRPs higher than that informally indicated by the government. 
    • Simply put, there are some 26 fertilizers (inclusive of urea), on which the government bears subsidy and also effectively decides the MRPs. 
• Supply plan
  • Apart from subsidising and deciding at what price companies can sell, the government also decides where they can sell. 
    • This is done through the Fertiliser (Movement) Control Order, 1973. 
  • Under this, the department of fertilisers draws an agreed monthly supply plan on all subsidised fertilisers in consultation with manufacturers and importers. 
• Taking Credit
  • When the government is spending vast sums of money on fertiliser subsidy plus deciding where and at what price companies can sell, it would obviously want to take credit and send that message to farmers.

Major Issues/ Challenges associated with the fertiliser sector 

• India is facing a tight supply position in fertilisers, especially of phosphatic and potassic nutrients.
  • Retail food inflation has hit a 7.68 per cent mark.
• The challenges include securing supply from new sources, costlier raw material, and logistics.
  • The pandemic has impacted fertilizer production, import and transportation across the world.
• Major fertiliser exporters such as China have gradually reduced their exports in view of a dip in production.
  • This has impacted countries such as India, which sources 40–45% of its phosphatic imports from China.
• There has been a surge in demand in regions like Europe, America, Brazil and Southeast Asia.
  • While the demand has increased, the supply side has faced constraints.
• There has been a steady increase in prices of raw material as well as logistics and freight costs.            
  • The disruption in the logistics chain during COVID has caused the average freight rates for ships to jump up to four times.
  • Besides, prices of fertilisers such as DAP and urea, and raw materials such as ammonia and phosphatic acid, have risen up to 250–300%.
• The total fertiliser subsidy bill is expected to reach Rs 2.5 lakh crore this financial year, up from Rs 1.62 crore in the revised estimates for the previous fiscal.

Way Forward/ Government’s stand on the fertiliser sector 

• The opening stock and the expected domestic production would be sufficient to meet the requirement.
  • However, the war in Ukraine has disrupted the supply of raw materials that Indian companies import, which is expected to impact domestic production.
• In efforts at price control, the government has increased the Nutrients Based Subsidy (NBS) rates for Kharif 2022.
  • The NBS rates have been raised for nitrogen (N) by 389%.
  • For potash (K) by 150%
  • For sulphur by 192%
• India has received shipments of 3.60 LMT of fertilisers from Russia since the beginning of the war.
  • India has entered into a C2C (corporation to corporation) supply arrangement with Russian companies.
• India has made efforts to secure fertiliser supply from alternative sources such as Saudi Arabia and Iran.
  • India has also clinched a long-term supply deal with Oman to get urea.
• For domestic production of urea, the government is focusing on the Matix (West Bengal), Ramagundam (Telangana) and Gorakhpur (UP) plants, and is reviving two other units, at Sindri and Barauni.
• The government is exploring the option of domestically mining raw materials such as rock phosphate.
• The Centre has asked the states to ensure micro-planning of fertiliser movement as per requirement.
  • It has asked them to ensure timely unloading of rakes for better utilisation of the rolling stock, to promote the use of alternative fertilisers such as nano urea, and to take strict action against diversion, hoarding and black marketing of fertilisers.

Source: BS