fertilizer presentation 1

8/3/2019 Fertilizer Presentation 1

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Demand of Fertilizer by 2011-12 inIndia


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Present scenerio

l India is the second largest consumer offertilisers in the world after China, consumingabout 26.5 million tonnes.

l Chemical fertilisers are key element of

modern technology and have played animportant role in agricultural productivitygrowth in India.

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Demand n supply

l However, the demand-supply gap offertilisers in India has increased in recenttimes, thereby leading to increaseddependency on imports.

l Indian imports, which were about 2 milliontonnes in early part of 2000, increased to10.2 million tonnes of fertilisers in 2008-09. Inview of importance of fertilisers in agriculturalgrowth and the possibility of an emergingdemand-supply gap, there is need to forecastfuture demand.

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Factor affecting price

l

The results show that non-price factors suchas irrigation, high yielding varieties, weremore important than price factors ininfluencing demand for fertilisers.

l Of the two price policy instruments,affordable fertiliser prices and higheragricultural commodity prices, the former ismore powerful in influencing fertiliserdemand.

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Future demand

l

By 2020, fertiliser demand in the country isprojected to increase to about 41.6 milliontones and is expected to grow at a faster ratein eastern and southern region compared

with north and west.l To meet the increasing fertiliser requirements

of the country, a conducive and stable policyenvironment, availability of raw materials,capital resources, and price incentives willplay a critical role.

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Present scenerio

l

Fertiliser consumption in India has beenincreasing over the years and today India isone of the largest producer and consumer offertilisers in the world.

l By 2009-10, total fertiliser consumption in thecountry was 26.49 million nutrient tonnes.

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Demand $ supply

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role of price and non-price factors

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However, most of these studies pertain topre-reforms period. Therefore, there is aneed to examine the likely impacts of thesocio-economic, technical and institutional

factors on fertiliser consumption andagricultural growth. Some of the problems offertiliser consumption vary from region toregion and need to be studied in their local

context but there are others which confrontmost stakeholders all over the country. In thispaper an attempt has been made tounderstand the factors affecting fertilisersdemand at macro level and forecast demand88


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Fertiliser Consumption Trends inIndia

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India is the second largest consumer offertilisers in the world, after China. Itaccounted for 15.3 per cent of the world's Nconsumption, 19 per cent of phosphatic (P)

and 14.4 per cent of potassic (K) nutrients in2008 (FAI, 2010).

l The fertiliser consumption in India hasgenerally exceeded domestic production inboth nitrogenous and phosphatic fertilisersexcept for few years. The entire requirementof potassic fertilisers is met through imports

as India does not have commercially viablesources of otash.99


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major reasons for increase in fertiliser consumptionduring 1971 to 1990.

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The rapid expansion of irrigation, spread of HYV seeds,introduction of Retention Price Scheme, distribution offertilisers to farmers at affordable prices, expansion ofdealers network, improvement in fertiliser availability andvirtually no change in farm gate fertiliser prices for 10

years (1981-1991)were major reasons for increase infertiliser consumption during 1971 to 1990.

l During 1990s, total fertiliser consumption fluctuatedbetween 12.15 and 16.8 million tonnes with the exceptionin 1999-00, when fertiliser consumption was over 18million tonnes. Total fertiliser consumption reached arecord level of 26.5 million tonnes during 2009-10.

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l

The Retention Price Scheme (RPS) for fertiliser Industrywas first introduced for nitrogenous fertilisers inNovember, 1977 and was extended to complex fertilisersin Feb 1979 and Single Super Phosphate (SSP) in 1982and remained in force for urea till 31.3.2003. Under the

RPS, Retention Price was fixed for each fertiliser unit bythe government based on the capacity utilization,consumption of inputs, etc.

l This ex-factory price was referred to as Retention Priceand a post-tax return of 12 percent on networth wasprovided as a reasonable return in this mechanism.

l The difference between the Retention Price and themaximum retail price was paid as subsidy.

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Distribution of fertiliserconsumption trends by regions

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Source: Fertiliser Association of India(2010)


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Share of primary nutrients (N, P andK) in total consumption of fertilisers

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Source: Fertiliser Association of India (2010)


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fertilizer presentation 1

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