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. 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. KEY TRENDS IN FERTILIZER
USE
Vijay Paul Sharma

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. 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. 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. 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. 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. 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. 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. MARKET STRUCTURE AND
SUPPLY SIDE ISSUES
Vijay Paul Sharma

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. 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. 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. 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. Fertiliser Pricing Policy and
Subsidy Environment
Vijay Paul Sharma

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. 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. 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. 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. 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. 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. Vijay Paul Sharma