One Nation One Fertilizer scheme under Pradhan Mantri Bhartiya Jan Urvarak Pariyojana (PMBJP), which aims to market fertilizers under Bharat brand Fertilizer, was introduced by Prime Minister Narendra Modi on October 18. One nation one Fertilizer scheme indicates that fertiliser packages will be the same design throughout the nation, bearing the labels BHARAT UREA, BHARAT DAP, BHARAT MOP and BHARAT NPK etc.
In the biggest move in fertilizer sector, all subsidised soil nutrients – Urea, Di-ammonium Phosphate (DAP), Muriate of Potash (MoP) and NPK – will be marketed under a single brand Bharat Fertlizer across the nation. The government is making it mandatory for companies to market subsidised fertilizers under ‘Bharat’ brand. This is being done as part of the ‘One Nation One Fertilizer’ (ONOF) scheme of the Fertilizer and Chemicals Ministry with an aim to prevent criss-cross movement of fertilizers and reduce high frieght subsidy.
With this, the government intends to reduce the criss-cross movement of fertilizers (urea, di-ammonium phosphate, and potash have fixed nutrient content as specified under the fertilizer control order and which does not change with brands) that will eventually help reduce freight subsidy bills and improve the availability.
What is One Nation One Fertilizer scheme ?
Under the slogan “One Nation One Fertilizer,” seeks to provide farmers with high-quality crop nutrients at reasonable prices. To make farming easier, the farmers will be given access to nano urea. A sacksful of urea can only be replaced by one nano urea bottle. The plan was put in place to stop the high freight subsidy-reducing Criss-cross movement of fertiliser brands. The Pradhan Mantri Bhartiya Jan Urvarak Pariyojana scheme and a single brand called “Bharat” would be used to advertise all subsidised soil nutrients, including urea, di-ammonium phosphate (DAP), muriate of potash (MoP), and NPK.
Under the new ‘One Nation One Fertilizer’ initiative, the companies are only permitted to advertise their name, brand, logo, and other pertinent product information on one-third of their bags. The “Bharat” brand and Pradhanmantri Bharatiya Jan Urvarak Pariyojana logo will have to be displayed on the remaining two-thirds of the space.
Moreover, for all fertilizer companies, State Trading Entities (STEs), and Fertilizer Marketing Entities (FMEs), the one brand name for UREA, Di-Ammonium Phosphate (DAP), Muriate of Potash (MOP), and Nitrogen Phosphorus Potassium (NPK), etc. would be BHARAT UREA, BHARAT DAP, BHARAT MOP, and BHARAT NPK, etc (FMEs), the new order mandates.
Pradhan Mantri Bhartiya Jan Urvarak Pariyojna (PMBJP) Scheme
- One Nation One Fertilizer would be accomplished by introducing “Single Brand for Fertilizers and People” under the “Pradhan Mantri Bhartiya Janurvarak Pariyojana” fertiliser subsidy scheme, according to a statement from the Ministry of Chemicals and Fertilizers.
- Businesses are only allowed to display their name, trademark, logo, and other crucial product information on one-third of their bags under the “One Nation One Fertilizer” programme. On the remaining two-thirds of the area, the “Bharat” brand and the Bharatiya Jan Fertilizer Project logo will be displayed.
- To all fertiliser companies, state trade organisations, and fertiliser marketing institutions, urea, di-ammonium phosphate (DAP), murate of potash (MOP), and nitrogen phosphorus potassium (NPK) are all sold under the same brand name, Bharat Urea, Bharat DAP, Bharat MOP, and Bharat NPK, respectively.
Benefits With The Roll-out of ‘Bharat’ Brand Fertilizer
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.
- 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.
- 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.
The Rationale Behind Bringing One Nation One Fertilizer Scheme
- Due to government regulations, there is no product differentiation among different brands for each type of fertiliser.
- However, farmers are generally unaware of this fact and prefer certain brands as a result of vigorous marketing strategies adopted by firms with strong retailer networks developed over time.
- Also, the local retailers used to promote sale of those fertiliser brands which offered them higher commission. As such farmers often ended up spending more to buy fertilisers of popular brands.
- Fertiliser Control Order (FCO), issued under the Essential Commodities Act, 1955, has laid down fertiliser-wise detailed specifications and any fertiliser, not meeting the said specification, can not be sold in the country for agricultural purposes.
One Nation One Fertilizer benefits:
- Standardisation: This will standardise fertiliser brands across the nation irrespective of the company that manufactures it.
- Affordability: Scheme will ensure affordable quality fertiliser of Bharat brand to the farmers. This scheme will result in reduction of the cost of fertilisers and increase their availability.
- Single branding: Competition among companies that push their brands will get reduced with this single branding, which will ensure sufficient supply of fertilisers across the country.
- Stopping urea diversion: It will also stop the diversion of urea for industrial purposes.
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.
- Critics argue that completely commoditising fertilisers could
- Impact their quality,
- Discourage manufacturers from bringing newer and more efficient products into the market if there is less scope for building a unique brand identity.
- It may also leave them as mere importers or contractors of fertilisers.
- Brands not owned:
- Many manufacturers have also expressed reluctance to spend on a brand they do not own.
- Once in a while, some companies may bear the expense, but 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 where almost every aspect- from product pricing to cost structure to geographical distribution and sale- is controlled by the government.
Fertiliser Market in India
Today, India is the third-largest producer and second-largest consumer of fertilisers in the world. The fertiliser industry is distributed between three major participants’ viz., Private sector undertakings, public sector units and cooperative societies.
The major government players are Brahmaputra Valley Fertiliser Corporation Limited (BVFCL), Rashtriya Chemicals and Fertilisers Limited (RCF), National Fertilisers Limited (NFL) and Fertilisers and Chemicals Travancore Limited (FACT).
All fertiliser companies market various types of fertilisers under their own brand name, even though, there is no product differentiation among different brands for each type of fertiliser. The India marketplace length for fertilizers reached a price of extra than USD 841.2 billion in 2021.
The India fertilizer marketplace is predicted to develop at a CAGR of 4.7 btween 2022 and 2027, attaining a projected price of USD 1108.1 billion with the aid of using 2027.
Growth of fertilizer Industry in India
During the 2017-21 year, total fertiliser production was 414.85 LMT. The total fertilizer output in the 2019-21 fiscal year is 462.15 LMT, an increase of more than 11.40% year-on-year. Due to the favorable policy environment that stimulated investment in the public, cooperative and private sectors, the country’s fertilizer production has surged. Currently, the country has 32 large-scale urea plants generating urea, 19 units producing DAP and complex fertilisers, and 2 units producing Ammonium Sulphate as a by-product.
India is a leading importer of fertilisers for its huge agriculture sector, which employs about 60% of the country’s workforce and accounts for 15% of the $2.7 trillion economy. To fertilise the crops, India depends on imports for its entire annual consumption of 4 million to 5 million tonnes of potash and ships in a third of this from Belarus and Russia.
India Fertiliser Status (2020-21)
|World’s 2nd largest consumer (N+P2O5+K2O)||32.55 MT|
|World’s 3nd largest consumer (N+P2O5)||18.48 MMT|
|World’s largest importer (N+P2O5+K2O)||10.90 MMT|
The way forward
It will be possible to lessen fertiliser black marketing with the government programme “One Nation One Fertilizer”. Still, the true issues will become apparent in real time. As part of the “Atmanibhar Bahrat” Mission or to achieve fertiliser self-sufficiency, the government plans to implement One Nation One Fertilizer. This plan will assist the government in lowering fertiliser imports. The government will be credited for giving the fertiliser manufacturers substantial subsidies.
Instead of spreading fertiliser across the field, India should concentrate on increasing fertiliser efficiency through need-based application. The freshly created Nano urea by IFFCO shows encouraging results in cutting down on urea usage. Following testing, such items need to be pushed as soon as possible. These reforms will have a significant influence on improving agricultural output, reducing climate change, offering an alternative to chemical fertilisers, and balancing the financial burden of fertiliser subsidies on future Union Budgets.