The One Nation One Fertiliser scheme

The Ministry of Chemicals and Fertilisers announced recently to implement One Nation One Fertiliser.

About “One Nation One Fertiliser” scheme:

The scheme would be done by introducing a “Single Brand for Fertilisers and Logo” under the fertiliser subsidy scheme named “Pradhanmantri Bhartiya Janurvarak Pariyojna” (PMBJP).
The scheme would extend to all four fertilisers – Urea, Di-Ammonium Phosphate, Muriate of Potash and complex NPK – with BHARAT pre-fixed.

India is among the world’s largest buyers of fertiliser, besides China, Brazil, and the US.
India imports four types of fertilisers:
- Urea
- diammonium phosphate (DAP)
- muriate of potash (MOP)
- nitrogen-phosphorous-potassium (NPK)

The single brand name would be BHARAT UREA, BHARAT DAP, BHARAT MOP and BHARAT NPK etc. respectively for all Fertiliser Companies, State Trading Entities (STEs) and Fertiliser Marketing Entities (FMEs).
Under the scheme, companies are allowed to display their name, brand, logo and other relevant product information only on one-third space of their bags.
On the remaining two-thirds space, the “Bharat” brand and Pradhanmantri Bharatiya Jan Urvarak Pariyojana logo will have to be shown.

Government’s argument for introducing this scheme:

Uniformity: It will bring uniformity in fertiliserbrands across the country.
Stop crisscross movements: It will stop crisscross movement of fertilisers, specially urea, which leads to its diversion for industrial purposes.
- Brand-wise demand of fertilisers in specific areas by farmers is one of the reasons of crisscross movement of fertilisers. Since fertiliser companies get the freight subsidy, they do not hesitate moving bags a longer distance.

Central government subsidy on fertilizers

Fertiliser sector is highly subsidised area wherein the maximum retail price (MRP) is fixed for urea and subsidy is fixed for non-nitrogenous fertiliser phosphate and potassium (P and K).
- Nearly 80 per cent of the cost of production of urea and P&K is being paid to fertilisers manufacturers in the form of central government subsidy.
- As for freight subsidy, about Rs 3,038 crore per annum for urea and Rs 3,300 crore per annum for P&K would be paid out this fiscal year.

‘The drawbacks of the scheme:

A couple of issues are immediately apparent:

It will disincentivise fertiliser companies from undertaking marketing and brand promotion activities.
Under this programme, fertiliser companies are expected to get reduced to just contract manufacturers and importers for the government.
As of now, the company is blamed in case any bag or batch of fertiliser is not up to the standards. But after the scheme's implementation, the onus may be put on the government.