The state-owned cooperative society Markfed in Punjab has resolved to supply fertilizers to farmers at the rate that existed in the past.

According to Markfed sources, there are more than lakh tonnes of DAP available with them and arrangements are being worked out to distribute fertilizers among the Punjab farmers.

Sources claim distribution of fertilizers at the rate being supplied through the state cooperative society is a bargain that costs farmers much less than normal.

Punjab watchers say the move is bound to impart a much needed fillip to agricultural development in the state.

The fertilizer Ministry has put distance limit on movement of fertilizers from ports and plants in a bid to reduce congestion in railway transportation and to lessen freight subsidy. That is to say, the companies cannot carry fertilizers beyond 1,400 km.

India imports six-to seven million tonnes of fertilizers per annum.

A source close to the ministry said fertilizer manufacturers and importers would have to stick to the distance limit and thus forego freedom of moving fertilizers anywhere they wanted.

The ministry has identified over a dozen ports from where fertilizers can be transported to the areas falling within the distance limit.

Experts say the move is prompted by laudable calculations.

Punjab   Chief Minister Prakash Singh Badal has expressed his concern at the recent hike in the prices of DAP and NPK fertilizers. He has called upon the central govt to balance the effect of the price rise by adequately subsidizing the supply of fertilizers to farmers.

In Mr Badal’s view, as the international fertilizer market had stabilized in terms of price development, the central govt should share the increased burden through raising the subsidy level  instead of imposing further financial obligations on farmers.

Chief Minster has charged that the central government’s solitary preoccupation is to reduce its subsidy bill and is barely bothered about the welfare of farmers.

In a statement issued at Chandigarh, Punjab Chief Minister has slammed the central govt’s anti-farmer   attitude and termed its obsession with saving money at the cost of farmers a move that may queer the country’s economic pitch.

As the private traders are responsible for the distribution of fertilizer in Bihar, farmers keep facing   shortage of it at regular intervals.

It is against this backdrop that Union Additional Agriculture Secretary has called upon the Bihar government to set up a body modeled on Haryana State Cooperative and Marketing Federation to ensure a reliable and timely supply of the essential commodity to farmers.

Union Additional Secretary added there is tremendous scope for development in agriculture in Bihar and the state would well to study the working of the cooperative organizations in Haryana and Punjab and do things in the same way these states have done.

Some commentators say Bihar is fast emerging as a state that may considerably contribute to the second green revolution that is on the cards in the eastern region of the country.

The govt of India is seriously thinking about raising the capital expenditure limit for the fertiliser plants. This is being done to attract fresh investment.  Of late, the fertiliser sector has been suffering a serious lack of investment, comment sources in the govt.

Through rejigging the investment policy, the govt hopes to save this crucial sector from a situation in which its progress has virtually grounded to a halt. Stagnation in the fertiliser production could upset the fundamentals of the nation’s economy, sources add.

According to sources, the govt. intends giving all kinds of incentives including substantial return on capital to the companies that are willing to invest. That apart, the present investment limit for greenfield and brownfield projects would be scrapped to make things easy for the prospective manufacturers.

However, some people say a scheme to attract investors would work only if the govt not only gave its investment policy a needed tweak but also took such steps as would reduce the whole bureaucratic rigmarole.

Sources in the govt. believe a sizeable increase in the fertiliser production would also mean reduction in the fertiliser subsidy payment.

The fact that a recast investment policy would lure even the fertiliser cooperative behemoths   into investing in a big way, is being accepted on all hands.

Once again proving the difference between a cooperative and a corporate, IFFCO has promised to continue with supply of fertilizers in the state of Uttar Pradesh. The crisis was averted for the time-being.

Readers could recall the fertilizer cooperative giant IFFCO fell victim to the arbitrary arm-twisting by the Uttar Pradesh which insisted on levying additional VAT. Between IFFCO and UP Govt stands Reliance Industries which is passing the extra-burden onto the fertilizer cooperative.

Defying comprehension, the reliance industries has decided to pay the controversial tax imposed by the UP government on natural gas and transfer the additional costs to customers.

IFFCO is miffed and feels it may have to close down its operations in Uttar Pradesh as it can barely be able to pay the additional costs. Unlike other corporate it hesitates to pass on the extra-burden to its members leading it to a very tough position.

IFFCO has been a party to the petition calling upon the court to stop the UP government from levying the tax.

Levying the VAT on the Reliance gas simply smacks of arrogance on the part of the UP govt, sources say.

The Reliance has argued as it already pays central tax on gas in the AP coast (gas from AP is  supplied to the fertiliser plants in UP)  it cannot be forced  to pay  the tax for the same gas in Uttar Pradesh.

Knowledgeable sources say  the Reliance  has  not given up its position on what it dubs a patently  unconstitutional  double taxation  and it would continue  to pursue  the matter with still greater vigour  in the court  in the  days ahead.

By Mohan Mishra, Director, NCUI

It is disheartening to note that the Union Budget 2012-13 had nothing for the Indian Cooperative Movement rather it reaffirms the facts that the government is blind to the sector despite this sector having made remarkable progress.

It has done quite well in the field of rural credit, fertilizer, dairy, sugar, consumer, fisheries, labour, housing, distribution of agriculture inputs, marketing, storage etc. It is not surprising that the Union Budget has ignored the sentiments and hopes of 6 lakhs cooperative societies with a membership of over 25 crores with 100% coverage of rural areas.

In a bid to achieve the elusive 4% farm growth, the Union Budget 2012-13 has proposed Rs. 1 lakh crore increase in Agriculture Credit target for 2012-13 while proposing 18% high in allocation to agriculture sector to Rs. 20208 crore.

There is a clear cut thrust on the Second Green Revolution, with the focus on irrigation. It has proposed a 13% jump in allocation to irrigation to Rs. 14242 crore. Agriculture cooperatives will play a pivotal role for the success of Second Green Revolution in order to achieve food self-sufficiency as well as developing the rural infrastructure.

The agriculture in the country has more than 90,000 primary agriculture cooperative societies handling credit, supplies of agriculture inputs, marketing and storage activities. The higher allocation of the resources for the cooperative in these areas is the need of the hour and proactive government support otherwise it will be a distance dream to witness the Second Green Revolution in the country with sustainable and inclusive growth.

The Finance Minister said in his budget speech, that he proposes to raise the target for agriculture credit in 2012-13 to Rs. 5,75,000 crores. However, the interest rate on crop loans for those farmers who pay on time has been kept unchanged at 4% and there is also proposed allocation of 10,000 crore to NABARD for refinancing regional rural banks to disburse short term crops loans to small and marginal farmers.

The NABARD has to play a proactive role for strengthening the cooperative rural credit institution in the country and identify new area and initiative for cooperatives in financial inclusion. The Kisan Credit Card will be also modified to use them through ATM. It will boost agriculture credit available to the farmers provided the cost of funding of ATM machines is born by NABARD.

The outlay under Rashtriya Krishi Vikas Yojna (RKVY) has also been raised by over 17% to Rs. 9217 crore. The cooperative can focus in the areas of development of major crops, machanisation, soil health, horticulture, integrated paste management, practices, marketing development, extension service etc. through participation in the RKVY scheme.

The budget allocation for bringing green revolution in Eastern India have also been increase by Rs. 1000 crore. The Eastern India can show good results in the green revolution by strengthening the PACS in the cooperatively under developed region. This will not only strengthens the agriculture activities but also creates the job opportunities through cooperative enterprises for the local area and reverse the migration by making rural living more attractive.

The budget also proposes a national mission on food processing to provide thrust to the sector. The marketing, processing and consumer cooperatives will have ample opportunities to strengthen its activity by diversifying in food processing sector which is a sun rise sector of Indian economy.

We know that three fourth of the India population depends upon agriculture and allied activities and there is a continuous fall of share of agriculture in India’s GDP since 1991. It has been felt that the rural population has not been given its due share from the countries rapid economic growth due to callus attitude of the policy maker towards cooperative sector. We are not hesitant to say that unless due recognition is being given to cooperative it will be difficult to revive agriculture and rural India in future.

In an interesting analysis offered by experts it is becoming clear that lack of clear-cut policy on Urea proved nemesis for former Uttar Pradesh Chief Minister Mayawati.

Mayawati’s loss was triggered by dwindling of only about 3.75 percentage of votes. Swaminathan S. Anklesaria Aiyar of Swamonomics fame theorizes that this loss of vote was due to urea anger.

In the rabi season farmers were a highly frustrated lot due to unavailability of the urea in the state. Queuing up for hours together for urea they often returned empty-handed.The Centre’s inability to come up with a clear-cut urea policy led to wide-spread shortage of the urea in the state driving the farmers furious with the local government.

Of the two nutrients based fertilizers Phosphorous-Potassium and nitrogen based Urea, the former has been decontrolled by the government while the latter is still being subsidized.This has led to soaring price for P & K while rate of urea is still under govt control.

Farmers have moved towards cheap urea even if their soil require phosphorous and potassium nutrients leading to shortage and black-marketing of the urea.

This was something Mayawati could not control and conceded defeat in Uttar Pradesh. Urea is majorly produced in cooperative sector with Iffco alone accounting for 25 percent of productions. Kribhco is another major player. Government policy has discouraged commissioning of any fertilizer plant for last 10 years as it increasingly depend on imports.

Government subsidy has already touched roof at Rs 70000 crore. If the UPA government does not heed,Urea may sink it too in 2014 general elections,warn experts.

Organisations representing farmers have opposed the govt decision to cut subsidy on phosphatic and  potassic (P&K) fertilisers and warned that it  would put the  retail prices  of the crop nutrients on an upward trend.

Iffco and  Fertiliser Association of India have, however, asserted that they would not allow the retail prices to go up, reduction in subsidy notwithstanding.

Some organisations of the agriculturists have slammed the govt. decision on  cut in subsidy and expressed apprehension of the govt move being used as an excuse  by the fertilizer companies for  pushing  up the prices  of the crop nutrients.

Kisan Adhikar Abhiyan and Paschim Odisha Krisha Sanghatan Samanva  Samiti are critical of the govt  decision but they would like the  government to make some  budgetary allocations  for ecological fertilizers in the coming budget.

Sources close to the govt say this would enable the govt to save a neat Rs 10,000 crore without compromising the interests of farmers.

It is worth mentioning that the recent fall in the international prices of the crop nutrients has primarily backgrounded the govt decision about cutting the fertiliser subsidy.

Fertiliser major IFFCO may fix the profit target for the next financial year at Rs 800 crore, lower than Rs 1,000 crore set for this year, due to various reasons, including uncertainty on subsidy front.

“Due to various factors, we are likely to scale down our profit target for the next financial year to Rs 800 crore, though the target this year is Rs 1,000 crore,” IFFCO Managing Director U S Awasthi told PTI in an interview in Bhuveneshwar.

The cooperative fertiliser giant would also refrain from pumping fresh investments, launching new projects and undertaking major expansion activities, diversification and acquisition due to fluid economic situation, he added.

However, the profit targeted during the current fiscal would certainly be met, Awasthi said, adding that IFFCO would also surpass the production target of 83 lakh tonnes of fertilisers by its five plants this year.

The turnover target of Rs 25,000 crore for 2011-12 would also be met by IFFCO, the fertiliser leader in the cooperative sector, he said after a visit to the IFFCO plant in Paradip.

Though production target is likely to be raised up to 85 lakh tonnes and turnover to Rs 26,000 crore for next fiscal, profit goal may have to be reduced due to several reasons including uncertainty over subsidy, he said.

Lamenting delay in formulation of a new comprehensive fertiliser policy, he said IFFCO is yet to get subsidies of Rs 12,000 crore which have been pending for a long time due to uncertainties in the absence of a clear policy.

Another reason for the possible decline in profit level is linked to apprehended foreign exchange loss due to highly fluid and volatile international economic scenario and recessionary trend, Awasthi added.
“I don’t think it is going to be a rosy situation globally. It is marked by uncertainties and slowdown,” he said describing the situation precarious for fertiliser sector.

Apart from sluggishness abroad, the domestic situation also remains bleak. The fertiliser sector in the country, particularly the urea industry, continues to be in a bad shape as the proposed new policy appears to have been pushed to the cold storage, Awasthi said.

He added that though it is a welcome move on the part of the government to shift fertiliser subsidy to ‘nutrient-based subsidy regime’ about two years ago, no concrete step has so far been taken to give it a real shape.

Seeking quick steps for decontrolling of the urea sector and introducing of direct subsidy to farmers, he said a nutrient-based subsidy policy would be encouraging and bring much needed succor to farmers as well as fertiliser industry.

Such a policy would assist in improving the soil health through balanced and integrated use of nutrients, including secondary and micro nutrients, he said.

It may be recalled that a Group of Ministers (GoM) last week  approved a new urea investment policy that promises incentives on natural gas price to fertiliser companies for reviving, expanding and setting up of new plants, to boost domestic production.

The country needs a new policy that can attract investment in the fertiliser sector, which is almost stagnant for over a decade. It would facilitate timely availability of fertiliser to the farmers and will reduce their imports.

On IFFCO’s fertiliser plant at Paradip, where a silo (cylindrical structure) had collapsed last week causing injury to some workers, Awasthi said a new one would come up very soon for which design has already been prepared.
Courtsey:PTI