Você está na página 1de 11

Fertilizers: A Worms Eye View

Anukool Chavhan 24/03/2013

A Letter to Begin With


24th March, 2013 Dear Reader, I feel extremely happy that you are reading this report. I know people interested in farmers and their plight are a minority. Yet I write this with optimism and hope that this will reach those who care. Before I start with the statistics and technical jargon, let me make my motivation clear. I am writing this on behalf of the marginal farmers and landless labors I have met and worked with. Its a plea to make their miserable lives better, a call to intervene before its too late. Farmers constitute over 60% of the total Indian population. More than 70% of these have land holdings of less than two hectares. In other words, they have a hand-to-mouth existence where life is all about limiting aspirations. While we take pride in the burgeoning online and mobile banking platforms, a small farmer in rural Vidarbha has to bribe his way through an intricate bureaucratic web of five departments for getting a loan for a well in his farm. He cannot care about lofty rhetoric, conference room discussions, and reams of reports. As for him, life begins where the paperwork ends. There has been a lot of debate about the pros and cons of Aadhar based Direct Cash Transfer (DCT) and I would resist from entering the same. In the hoopla of DCT, we are forgetting that the core issue is not whether to instill the subsidy amount at the level of manufacturers, retailers or farmers. That is a mere argument arising from discussing the central problem: How to design a system where every farmer can buy sufficient amount of fertilizers at affordable prices with ease? With this report, I try to form a direct and honest feedback loop from the bottom of the pyramid to the apex of power; a Worms Eye view of key fertilizer issues like demand forecast, allocation, distribution, transparency and availability. I hope the silent sighs of a common farmer fall on receptive ears and dont go unheard in the cacophony of expert views and political speeches.

Yours Sincerely,

Anukool Chavhan Pusad, Maharashtra. anukoolchavhan@gmail.com

1|Page

At a Glance
Introduction: ................................................................................................................................................. 3 Need for Accurate Demand Forecasts: ......................................................................................................... 3 Skewed Consumption Pattern: ..................................................................................................................... 3 Fertilizer Supply Chain: ................................................................................................................................. 4 Problems Faced by the Current System: ....................................................................................................... 4 Lack of Reliable Data at the Taluka Level:............................................................................................. 4 Lack of Transparency in Inventory Levels Beyond District Levels: ........................................................ 5 Non-Involvement of the Community: ................................................................................................... 5 The need for Direct Transfer of Fertilizer Subsidy: ....................................................................................... 6 Proposed Framework by Governments Task Force: .................................................................................... 6 Phase IInformation Visibility Till the Retailer: ................................................................................... 6 Phase IISubsidy Payment to Retailer: ................................................................................................ 7 Phase IIISubsidy Payment to Farmer: ................................................................................................ 7 Technology Requirements for Implementation of Direct Subsidy: .............................................................. 7 Direct Subsidy Transfer Story Beyond Paper: ............................................................................................. 7 Defining the Problem: ................................................................................................................................... 8 The Proposed Solution: ................................................................................................................................. 8 Youth Supported Survey & Data Collection: ................................................................................................. 8 Single Platform Fertilizer Tracking at the Wholesaler Level: ................................................................ 9 Conclusions: .................................................................................................................................................. 9

2|Page

1. Current Fertilizer Scenario


Introduction:
India is the second largest consumer of fertilizers in the world after China, consuming about 26.5 million tons in 2010-11. The Fertilizer Control Order (FCO) includes 93 chemical fertilizer grades, including straight, complex and fortified fertilizers with secondary and micro-nutrients and water soluble fertilizers. These grades can be produced/ imported and sold in the country. Of these, 23 fertilizers are subsidized by the Department of Fertilizers (DOF) for agricultural use. The fertilizer market comprises two major typesUrea and NPK complex. Urea makes up for almost half of the total fertilizer consumption. Other major fertilizer types include Di-Ammonium Phosphate (DAP), Single Super Phosphate (SSP) and Muriate of Potash (MOP).

Need for Accurate Demand Forecasts:


Accurate demand forecasts for projected fertilizer consumption are necessary for proper planning for production, imports and supply of feedstock and raw materials. To this end, separate nutrient demand functions are estimated for Nitrogen (N), Phosphorous (P), Potassium (K) and total fertilizers (N+P+K). Trends in various demand affecting variables are consolidated to arrive at a projected demand for fertilizers. There are various approaches of demand forecasts, viz., need based, crop area, time series, causal, etc. Different methodologies have been devised by experts from time to time keeping in view these approaches. The selection of a method depends upon the purpose to be served by the forecast. It is observed that the demand projections by Fertilizer Authority of India (FAI) are fairly accurate at the National level while the accuracy tends to decrease as we move to the zonal and state levels. An accurate national projection is of limited use if the regional projections are flawed. It will lead to incorrect allocation of fertilizers to regions leading to inefficient use, shortage and wastage. This suggests a need to have more accurate past consumption and variables data at the state level to improve regional forecasts.

Skewed Consumption Pattern:


With the ever increasing population, the demand for food, clothing and other basic needs is increasing on one hand while the availability of arable land is decreasing on the other. There is a constant need to improve agricultural output per hectare. Accurate data of past consumption of various fertilizers, and forecasting the future demand of the same at national, zonal, state, district and taluka levels is essential to achieve this. The fertilizer demand and intensity of use in India is highly skewed at zonal, state and district levels (Ref. Table 1.1)

3|Page

Hierarchy Level Zone State

Highest Intensity Region South Punjab

Intensity (H) (kg) 205 237.3 275.8

Lowest Intensity Intensity (L) Region (kg) West 109.1 Arunachal 3 Pradesh Hingoli 26.7

Disperancy Factor (H/L) 1.879 79.1 10.33

District (in Kolhapur Maharashtra)

Table 1.1. Per hectare use of fertilizer nutrients (N+P+K) at various hierarchical levels during 2010-11

There are various factors which influence the use of fertilizers. These include agro-climactic conditions like fertility of soil, infrastructural variables like irrigation, economic factors like price of inputs and outputs, etc. In view of the diversity in quantity and type of fertilizers used in various regions, distribution of the right type and quantity of fertilizers to the right places is essential.

Fertilizer Supply Chain:


The quantity of fertilizer generated in the supply chain is based on demand consolidated by the Department of Agriculture and Cooperation (DAC) and the DOF, in consultation with the State Governments and manufacturers. Both, annual requirements and seasonal needs are calculated based on the availability of rainfall data and production/import schedules of manufacturers. Distribution takes place as per the monthly supply plan finalized by the abovementioned stakeholders. A Fertilizer Monitoring System (FMS) is used to monitor the day-to-day dispatches/imports, movement, receipt and sale of fertilizers in the districts. Reliable data is available only up to the first sale point in the district i.e. the dealer.

Problems Faced by the Current System:


The current system of fertilizer distribution faces many problems at the local level which render the hard-work done at the top useless as the end user demand is not met. Some of these problems are: Lack of Reliable Data at the Taluka Level: As seen above, demand projections for fertilizer rely on variables like irrigated land, crop cycle habits, area under High Yielding Variety, fertilizer preference data, etc. These are currently based on official data consolidated from government records. These records are often inaccurate due to various reasons: (a) Farmers usually divide their land entitlements into smaller parts to become eligible for government schemes aimed at small farmers. (b) False crop records are often maintained to get crop specific government concessions. (c) Renting and sharing of agricultural lands on an informal basis like makta and batai system in Maharashtra are not recorded on paper. (e) The records are not updated regularly and there is no proactive survey to collect relevant data.

4|Page

(f) There is no transparency in the process or results of data collection, recording or flow of information. Lack of Transparency in Inventory Levels Beyond District Levels: FMS only tracks the fertilizer levels till the first sale point and there is no data available to the public regarding either inventory levels at wholesaler levels or the movement of various fertilizers from rake point up to the retailer. This leads to hoarding, artificial scarcity and monopolistic malpractices like black marketing by local wholesalers, retailers as well as cooperative societies involved with fertilizer distribution. Lack of transparency in fertilizer movement also leads to leakages of subsidized fertilizers for industrial use causing losses to both the government exchequer as well as the farmers.

Non-Involvement of the Community: In the current system, farmers and local community in general are not in the decision making loop and arent consulted for their opinion on fertilizer usage patterns and demands. The process has been reduced to a mechanical consolidation of inaccurate data collected by the local babus who are usually hand in gloves with the malpractices of dealers and retailers.

5|Page

2. Road for Direct Subsidy Transfer


The need for Direct Transfer of Fertilizer Subsidy:
With large amounts being spent on fertilizer subsidies, the Government is rightfully examining ways to ensure that the spending is carried out in ways that maximize positive outcomes, and lead to significant poverty reductions. If rolled out carefully, direct transfer of fertilizer subsidy can hugely and positively impact the subsidy leakages and at a later stage, introduce targeted subsidies for marginal farmers. The Government provides subsidies, notably on fuel and food grains, to enable the common man to have access to these basic necessities at affordable prices. A significant proportion of subsidized fuel does not reach the targeted beneficiaries and there is large scale diversion of subsidized kerosene oil. A recent tragic event has highlighted this practice. We have deliberated for long the modalities of implementing such subsidies. The debate now has to make way for decision. To ensure greater efficiency, cost effectiveness and better delivery for both kerosene and fertilizers, the Government will move towards direct transfer of cash subsidy to people living below poverty line in a phased manner. - Finance Minister of India in the Budget Speech of 2011-12

Proposed Framework by Governments Task Force:


According to Interim report of the Task Force on Direct transfer of Subsidies on Kerosene, LPG and Fertilizer (henceforth referred to as The Report in this chapter), a phased approach to reforms in fertilizer subsidy disbursement will be adopted. The proposed process involves three phases: Phase IInformation Visibility Till the Retailer: Under this phase, The Report describes an alternative information flow along the fertilizer supply chain from the manufacturer till the retailer. It envisages up-to-date information availability in the public domain about availability of fertilizers at the retailer level. The proposed information flow is shown below (sourced from The Report):

6|Page

Phase IISubsidy Payment to Retailer: According to The Report, in this phase, fertilizer subsidy will be released to the retailer (instead of the manufacturer). The subsidy will be electronically transferred to the retailers bank account on receipt of fertilizer from the wholesaler. The effective implementation of this phase depends on the successful completion of Phase I. Phase IIISubsidy Payment to Farmer: The Report envisages subsidy disbursement to the farmers bank account directly based on Aadhar identification platform. This is proposed to be done electronically in real time with no practical time-lag between buying of fertilizer and transfer of funds.

Technology Requirements for Implementation of Direct Subsidy:


At the crux of implementation of direct transfer of subsidies lies a robust technological foundation. This includes: (a) Registration of all wholesalers, retailers, co-operatives, Primary Agricultural Co-operative Societies and institutional agencies involved in the sale of fertilizers across the country. (b) Tracking the sale of fertilizer and disbursement of subsidy on receipt of at retailer. (c) Web based applications capturing and consolidating business processes/information flow from manufacturers up to retailers. (c) Transparency Portal where anybody can access information on retailer stock levels of various fertilizers i.e. real time public domain access to consolidated data. (d) Countrywide Aadhar penetration, successful identity authentication and successful operation of Aadhar linked Bank accounts for even the poorest farmers. (e) Penetration of Core Banking Service (CBS) to all banks including District Co-Operative Banks which usually handle farmer loans and subsidies.

Direct Subsidy Transfer Story Beyond Paper:


Thus far, the transition to direct transfer of subsidy has been anything but a smooth ride. There have been numerous problems faced by the beneficiaries in some districts where the pilots were implemented for food subsidy and Phase I of fertilizer subsidy. Some of these problems were: (a) Failure and lack of perusal of necessary upload of stock information by the retailers and dealers. (b) Failure to maintain a consolidated data of stock levels of various fertilizers at the retailer. (c) In absence of a consolidated data, no information could be made available to the public, leading to failure in operating the proposed transparency portal. (d) Lack of Aadhar Card penetration to the desired levels. (e) Difficulty in opening Aadhar linked Bank accounts. (f) Long delay/failure in transfer of funds leading to suspicion of the new technology in the minds of beneficiaries. 7|Page

3. Inserting the Missing Link


Defining the Problem:
The problems in fertilizer distribution and subsidy transfer identified in the previous sections can be summarized as follows: (a) Lack of relevant and accurate agro-related datafertilizer demands, irrigation levels, crop patterns at the taluka and village level. (b) No fertilizer inventory data beyond fist point of sale in the district. (b) Difficulties in consolidating the retailer data due to multi-platform uploads. (b) Technological problems related to premature rolling of Direct Subsidy Transfer.

The Proposed Solution:


Youth Supported Survey & Data Collection: The problem with local data is its lack of accuracy due to dependence on on-paper government records rather than on-field realities. This can be solved by adopting Youth Supported Survey and Data Collection (YSSDC). As part of this, interested college students would volunteer to collect data directly from the farmers. This data would be collected based on a simple questionnaire asking relevant questions like crop pattern for the year, irrigation availability and sources, fertilizer preferences, aspirations, problems in fertilizer availability, mobile penetration, Aadhar penetration, Bank account availability, etc. The energy of students from National Service Scheme (NSS) can also be channelized in a constructive manner. Data from individual data collectors would then be uploaded to a cloud-based database by a team of student volunteers. This information would be available for use in public domain along with the name of data collector and uploader to imbibe a sense of responsibility and pride. The farmers identity and personal details would not be disclosed. Data would be consolidated at various hierarchical levelsindividual, village, taluka, district, et alto get the first hand projection of immediate fertilizer need. Other collected variables would improve accuracy of long term demand projections by already tested projection models. This data would also help social workers, researchers, environmentalists and whistle-blowers to monitor trends and take corrective measures. In the initial years of the program, the data from YSSDC and orthodox methods would be tested against actual consumption figures to monitor the accuracy of the method. This feedback would be used to fine tune the program features and make it more accurate and relevant. The key is to keep the data and methodology freely available in the public domain for interpretation, appraisal and improvement.

8|Page

Urban youth, which is getting detached from the rural roots will become aware of the village life and associated problems, inspiring it to find innovative solutions for the same. The program would act as a forum to exchange ideas among youth from different backgrounds culminating into new collaborations for solving complex problems. Single Platform Fertilizer Tracking at the Wholesaler Level: The multi-platform inventory information upload proved too much for the current technological infrastructure to handle. This has created a bottleneck in transition to Phase II and III of the proposed direct transfer of fertilizer subsidy. To overcome this problem, we can have an interim Phase-I(a) wherein fertilizer movement and sales would be tracked down to the wholesaler levels. Since the problems of lack of technical knowledge and infrastructure is not as big an issue at the wholesaler level, update of buying and selling of fertilizer stocks can be done within the current technological capacities. Subsidy will be transferred to the wholesaler level on receipt of fertilizers, updating the data and verification with dealer level FMS data. Since, we are working at the wholesaler level, technical delays of a few days in verification and release of subsidy could be bore. This would help to iron out the systemic creases. The sales information of the wholesaler would implicitly give inventory information at the retailer level. This data would be consolidated and made available in the public domainin real time on a web portal and at monthly intervals in local newspapersto make the fertilizer movements transparent and help farmers to track availability of the desired fertilizers. This would help to plug fertilizer leakages, hoarding and artificial scarcity. A consolidated data can also be used to transport fertilizers from places of excess to necessity most efficiently. Since the number of wholesalers is much less than the retailers, this interim step would provide testing grounds for feasibility of uploading and maintaining a web portal of consolidated data in real time and correct technical glitches before rolling out on a larger scale. All along the Phase-I(a), an efficiently working system which allows multi-platform data upload from the retailers would be developed in the background without the pressure of delivering immediate results. Once this system is up and working, Phase-I(b) can be rolled out where the data upload and fertilizer transfer would take place at the retailer level. This could then be followed by Phase-II and III of Direct Cash Transfer to the retailer and end consumer levels.

Conclusions:
YSSDC along with adding a step in rolling out the direct cash transfer would improve fertilizer supply chain while blending effortlessly in the current long term ambition of the Government to develop worlds largest direct cash transfer system. Few advantages of the above approach are: (a) allowing a time cushion for nationwide Aadhar penetration (b) popularizing an online database of fertilizer availability with less chances of a crash-down (c) Involving youth in the process of agricultural development and direct cash transfer, thus an unforeseen level of transparency and collective effort. 9|Page

A Report By
Anukool Chavhan Founder Asmita Agribusiness Gujari Chowk, Pusad, Dist Yavatmal Maharashtra PIN 445204 Email: anukoolchavhan@gmail.com

10 | P a g e

Você também pode gostar