One Nation, One Fertilizer’ Scheme

The 'One Nation, One Fertilizer' initiative was recently launched.

More on the 'One Nation, One Fertilizer' initiative

• The scheme requires all fertilizer companies, State Trading Entities (SMEs), and Fertiliser Marketing Entities (FMEs) to use a single "Bharat" brand and logo under the Pradhanmantri Bhartiya Janurvarak Pariyojna” (PMBJP).

• The PMBJP logo and the new "Bharat" brand name will cover two-thirds of the front of the fertilizer packet.
• The single brand name for UREA, DAP, MOP and NPK, etc. would be BHARAT UREA, BHARAT DAP, BHARAT MOP and BHARAT NPK
• On the remaining one-third space, the manufacturing brands can only display their name, logo, and other information.

The scheme's significance:

• Standardization: This will standardize fertilizer brands across the country, regardless of who manufactures them.
• Affordability: The scheme will provide farmers with affordable quality Bharat brand fertilizer.
• This scheme will lower the cost of fertilizers while increasing their availability.
• Single branding: With this single branding, competition among companies that push their brands will be reduced, ensuring a sufficient supply of fertilizers across the country.
• Reduced freight charges: By eliminating the crisscross movement of fertilizers, a single brand name will help to reduce freight charges and transit time.
• It will also put an end to the diversion of urea for industrial purposes.

Major Issues/Challenges in the Fertilizer Industry

Supply constraints:

• India is facing a scarcity of fertilizers, particularly phosphatic and potassic nutrients.
• Retail food inflation has reached 7.68 percent.
• The difficulties include securing supplies from new sources, more expensive raw materials, and logistics.
• The pandemic has had an impact on fertilizer production, import, and transportation worldwide.

Global concerns:

• Due to a drop in production, major fertilizer exporters such as China have gradually reduced their exports.
• This has had an impact on countries such as India, which imports 40-45% of its phosphates from China.
• Demand has increased in regions such as Europe, America, Brazil, and Southeast Asia.
• While demand has increased, supply has become constrained.

Other reasons:

• Raw material prices, as well as logistics and freight costs, have been steadily rising.
• Because of the disruption in the logistics chain caused by COVID, the average freight rate for ships has increased fourfold.
• Furthermore, the prices of fertilisers like DAP and urea, as well as raw materials like ammonia and phosphatic acid, have risen by 250-300%.
• The total fertilizer subsidy bill is expected to reach Rs 2.5 lakh crore this fiscal year, up from Rs 1.62 crore in the previous fiscal's revised estimates.

Criticisms

• Critics argue that completely commoditizing fertilizers will have an impact on their quality and will discourage manufacturers from bringing newer and more efficient products to market because there will be less opportunity to build a unique brand identity.
• It may also reduce the company to the status of mere fertilizer importers or contractors for the government.
• Many manufacturers have also expressed apprehension about spending money on a brand they do not own.
• Some companies may bear the expense on occasion, but it will be difficult to spend continuously on advertisements when the company's brand value is zero.
• Regulation: A government brand will add another layer of regulation to the fertilizer manufacturing sector, where the government controls almost every aspect, from product pricing to cost structure to geographical distribution and sale.
• Currently, in case of any bag or batch of fertilizers not meeting the required standards, the blame is put on the company. But now, that may be passed on fully to the government

The government's reasoning behind the One Nation, One Fertilizer initiative:

MRP and Subsidy

• The government currently sets the maximum retail price of urea, which compensates companies for higher manufacturing or import costs.
• Non-urea fertilizer MRPs are decontrolled on paper.
• Companies, however, are ineligible for subsidies if they sell at MRPs higher than those formally indicated by the government.
• Simply put, there are 26 fertilizers (including urea) for which the government provides subsidies and effectively determines MRPs.

Plan of supply

• Aside from subsidizing and determining the price at which companies can sell, the government also determines where they can sell.
• The Fertiliser (Movement) Control Order, 1973 is used to accomplish this.
• In accordance with this, the Department of Fertilisers develops an agreed-upon monthly supply plan for all subsidized fertilizers in consultation with manufacturers and importers.

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