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The Ministry of Fertilisers has made it compulsory for the fertiliser companies to certify the correct price of their products entered in the online fertiliser monitoring system of the government while claiming subsidy on the potash and phosphorous variety of fertiliser.
According to official sources, the decision was taken at a meeting held to assess the huge difference between the prices quoted on FMS and the actual market price (MRP). This meeting was held to assess the prices of the phosphate and potash prices which are partially deregulated under the nutrient based subsidy policy.
Accordingly, when a fertiliser manufacturer claims for reimbursement of the subsidy on the MRP, it has to certify the MRP fed in the FMS. To be specific, there could not be any discrepancy between MRP printed on the bags and that reported on the FMS.
Except for urea, prices of all other fertiliser categories including potash and phosphates have a fixed subsidy component and thus the price keeps fluctuating. In 2011-12, there was substantial increase in the prices of non urea prices. DAP was Rs 11,000 a tonne at the beginning of the kharif season in May-June and later increased to Rs 18,500 a tonne. Since April 2010 when the government decontrolled non-urea fertilisers, of DAP has almost doubled from Rs 9,350 a tonne at the time.
Thus a review of the non urea fertiliser prices was called last year so as to check the abnormal increase as much of the imported stocks left unsold as farmers could not afford the price. At the same time, the manufactures were reluctant to decrease the prices.
The department of fertilizers has also decided to collaborate with the ministry of consumer affairs in order to ascertain the actual price of fertilizer being sold to the farmers at the farm gate level.
Meanwhile, the Commission for Agricultural Costs (CACP) has recommended several options for better handling of the fertiliser subsidy by better distribution of the subsidy and streamlining the price differences between urea and non urea fertiliser.
CACP is of the view that the fertiliser subsidy to the farmers should not be routed through fertiliser manufacturing units. The report has suggested that the complete subsidy owing to fertiliser should be directly given to the farmers and not through priority allocation of natural gas to fertiliser units. It will solve two problems. First, with money in hand, the farmers will decide which fertilisers to buy and my not rely wholly on urea based fertiliser.
Secondly, the disproportionate use of urea in agriculture would also stop. Currently, Indian fertiliser plants mostly manufacture urea and rest of the varieties like potash and sculpture are imported. These plants while using natural gas at administered price under priority allocation manufacture mostly urea since it is under floating subsidy scheme of the government.
This is because unlike other varieties, in urea the government fixes the marketing price. While the urea is sold to the farmers at the subsidized price, these companies are compensated for the loss. Thus eve if they have facilities to process other varieties of fertiliser, it has been deliberate attempt of the companies to stick to urea manufacturing, said official sources.
Thus the farmers are not getting any benefit out of the fertiliser subsidy which is mainly being given to the companies and all the farmers use is urea since that is major fertiliser manufactured. Officials said, the idea is to largely contain the fertiliser subsidy by optimum use of available stocks of varieties of fertiliser other than urea.
