UREA

8.1.1 KHARIF 1998

The availability of urea, which is the only fertilizer under price and movement control of Government, remained satisfactory throughout the season in Kharif 1998. Kharif 1998 season had field opening stock of 24 LMTs on 1.4.1998 compared to 12.3 LMTs during the previous Kharif. The opening stock coupled with increased indigenous production helped in progressively ensuring higher availability to the States throughout the season. The cumulative availability of urea at the end of the season was nearly 120 LMTs against the assessed requirement of 105 LMTs for the season . However, the expected growth in consumption (10%) did not materialize. The sales during the season were 4% higher over the sales of urea during previous Kharif.

The monsoon was satisfactory on the whole in the country except in the States of Madhya Pradesh and West Bengal which had less than the normal rainfall. But the erraticity of rainfall had effect on the sales of urea during Kharif which kept low at 98.43 LMTs . As a result, the consumption during Kharif would be lower than the estimated 105 LMTs. State-wise position of sales varied widely if compared to Kharif’97. They were high in the States of Andhra Pradesh (16%), Uttar Pradesh (12%), Bihar (5%), Tamil Nadu (3%), Karnataka (2%) and Punjab (2%) while there was negative growth in West Bengal (4%), Maharashtra (3%), Rajasthan (3%), Gujarat (2%), Haryana and Madhya Pradesh (1%) each. In Orissa, the sales were at the same level as in previous Kharif.

8.1.2 RABI 1998-99

Rabi 1998-99 has opened with the inventory of 20.77 LMTs in the States which is almost at the same level as in Rabi 1997-98. During the first three months, despatches of 55.32 LMTs have been made. As a result, cumulative availability of 76.09 LMTs of urea has been achieved by 31st December 1998. The off-take of urea during the ongoing Rabi season is expected to be higher as the area under wheat cultivation has increased partly on account of unforeseen rains during October-November 1998 (which improved the moisture in the soil) and partly due to receding of water from the flood affected districts in Eastern U.P. and Bihar. No problems are envisaged in meeting the assessed requirement of 111 LMTs of urea for the season as the cumulative availability together from the indigenous production, imports and opening stocks is estimated to be nearly 126 LMTs.

DECONTROLLED FERTILIZERS

8.2.1 KHARIF 1998

The availability of decontrolled phosphatic and potassic fertilizers are dependent on market forces operating within the framework of the Concession Scheme. The Scheme is administered by the Department of Agriculture & Cooperation (DAC). Due to non-announcement of rates of concession which were linked to the study by the Bureau of Industrial Costs & Prices (BICP), the contracting of imports of both DAP & MOP was affected. 2.54 LMTs of DAP and 1.15 LMTs MOP imports were brought during April-May 1998 against imports of 4.59 LMTs and 3.41 LMTs reportedly during April-May 1997. In case of MOP, the international suppliers had reportedly cartelised in the hope of extracting sizeable increase over the prices of MOP of 1997-98. Since the BICP Report was to take time, Department of Agriculture & Cooperation (DAC) was given assessment of MOP prices which could pre-emptively be considered. A breakthrough in contracting of MOP from Jordan and Israel became possible in June 1998. In the remaining period of Kharif 1998, 7.04 LMTs of MOP imports were brought by the importers. As a result, the cumulative availability of 7.43 LMTs MOP was achieved in Kharif. This was lower if compared to Kharif 1997. The lower level of availability resulted in shortages which were experienced in major MOP consuming States of Andhra Pradesh, Karnataka, Tamil Nadu and Kerala besides others.

As regards DAP, 9.6 LMTs of imports were made in Kharif 1998 compared to 12.88 LMTs in Kharif 1997. However, due to buoyancy in indigenous production (19.65 LMTs), the cumulative availability of 33 LMTs became possible in field which was lower if compared with availability during Kharif 1997 (36 LMTs). However, no shortages were reported by any of the States.

The table below gives the cumulative availability and sales of DAP and MOP during Kharif 1998 :

                                                                        (in Lakh Tonne)

                                       Figures in brackets correspond to the last year

8.2.2 RABI 1998-99

Unlike in the past when concessions announced under the Concession Scheme were reviewed for each season, the Government in Department of Agriculture & Cooperation announced long-term policy under the Scheme on 28.8.98 in which concessions would remain anchored. The rates of concessions were enhanced over that of Rabi 1997-98. It was notified that these rates of concessions would remain in force till 31.3.2000. At the same time, it was announced that the Maximum Retail Prices (MRPs) would be determined by the market forces. The new policy in which MRPs were freed, spurred contracting of additional imports for Rabi 1998-99. Within a month of the announcement of the policy, nearly 5 LMTs of DAP imports were additionally contracted. However, before the policy could be made effective from 1.10.98, it was rolled back and the Government decided that MRPs would continue at the same level as that of Kharif’98 and that rates of concessions would be announced separately. Consequent to change in policy, cancellation was made of the contracts amounting to 1.30 lakh MTs as the industry was apprehensive of locking up of funds under the continuing uncertainty about the rates of concessions since Kharif 1998. Despite this, however, 8.20 lakh MTs of DAP had landed in the country upto the end of December 1998 compared to 1.7 lakh MTs during the entire season in the previous Rabi. Since large arrivals were scheduled between October-November 1998, it led to bunching of vessels. Nearly 5 lakh MTs were destined for 2 ports, namely Vishakhapatnam and JNPT which led to congestion and, consequent, delay in evacuation from these ports. The difficulties in handling at Vizag port were compounded by the cyclone which hit the coast during November 1998. Due to all these reasons, DAP could not be pre-positioned in the States. The demand for DAP is highly seasonal. So the Government intervened and extended support by granting priority (a) in berthing of DAP vessels at the ports and (b) in movement of DAP by rail. The priority in movement by rail was accorded also from the plants. The accelerated evacuation of DAP from plants and ports together helped in redressing the localised shortages as DAP couldn’t be pre-positioned in view of the foregoing reasons in the States of Punjab, Haryana, Rajasthan, Madhya Pradesh and Uttar Pradesh. The shortages were also felt because preponement of sowing resulted in peak demand during October-November and due to increase in area sown under wheat.

In respect of other decontrolled fertilizers including MOP, there have been no shortages. During Rabi, 17 lakh MTs of imports are estimated to be delivered which are adequate to meet the projected requirement. Temporary disruption was caused in movement of MOP to West Bengal by the cyclonic disturbances at East-Coast but this was made good by accelerated despatches of MOP subsequently.

8.3.1 The following table summarizes the season-wise position in respect of the availability and sales of the major fertilizers i.e. Urea, DAP and MOP in 1997-98 and 1998-99 (upto 31.12.98):

                                                                                                              (in Lakh MT)

** Decontrolled with effect from 25.8.1992 and no formal assessment of the demand is made.

MOVEMENT OF FERTILIZERS

8.4.1 Under the Allocation of Business Rules, the Department of Fertilizers is entrusted the primary responsibility of ensuring the movement and distribution of controlled fertilizers from various plants/ports in accordance with the State-wise allocations made by the Department of Agriculture & Cooperation (DAC) under the Essential Commodities Act, 1955 (ECA). The distribution of imported urea is made keeping in view the requirements both in time and space of each of the States.

8.4.2 The major share in transportation of fertilizers is of the Railways. During 1997-98, Railways had moved about 74% of the fertilizers produced and imported in the country. In 1998-99, the demand of railway wagons for the transportation of fertilizers was met in full. During April-November 1998, 179.80 LMTs of fertilizers was moved by the Railways as against 178.90 LMTs in the corresponding period of 1997-98.

8.4.3 Judicious management of the demand supply balance has helped to reduce the average lead of fertilizer movement by rail. As compared to the average lead of 854 KMs. for the full year in 1997-98, average rail lead of 812 KMs. was attained during April- October 1998. This is the lowest since 1989-90 as may be seen from the following table:

                                                      (in KM)

IMPORT OF FERTILIZERS

8.5.1 Imports of urea on Government account are made to bridge the gap between the indigenous availability and requirement through designated canalising agencies like MMTC Ltd., State Trading Corporation (STC) and Indian Potash Ltd. (IPL). The other major fertilizers like DAP and MOP are freely importable on private trade account.

8.5.2 Due to temporary shut down of plants of CIS producers, the AG suppliers had quoted artificially high prices for urea imports during February-March’98 for deliveries during April to June’98. In view of this, purchases of urea were deferred from June to July’98 as the overall availability of urea was adequate in the country. With the resumption of production by CIS countries and consequent increase of supplies, the canalising agencies could make purchases at prices ranging from US $ 86 to US $ 90.50 PMT (FOB) which were considerably lower than those quoted earlier in the range of US $ 109-113 PMT FOB.

8.5.3 The deliveries of imported urea at low prices has resulted in considerable savings of subsidy on urea imports as compared to the previous year as can be discerned from the table below:

                                                                        (Rs. Crore)

* includes amounts of Rs.180.79 crores, Rs.236.95 crores and Rs.132.02 crores as C&F value of MOP imported under bilateral assistance during 1993-94, 1994-95 and 1995-96 respectively.

8.5.4 The urea imports during 1997-98 were handled at 7 ports in the country on both the east and west coasts to bridge the gap between availability and requirement in the deficit States. The performance of the agencies appointed by the Department at the ports to handle urea vessels improved over the previous year and this resulted in faster turn-around of the ships carrying urea consignments to the country’s ports.

FERTILIZER EDUCATION PROJECTS

8.6.1 Most of the fertilizer companies are carrying out agricultural extension work with emphasis on education of farmers in the scientific application of fertilizers out of their own resources. However, Krishak Bharati Cooperative Ltd. (KRIBHCO), Indian Farmers Fertiliser Cooperative Ltd. (IFFCO) and Indian Potash Ltd. (IPL) are also implementing projects with foreign assistance details of which are given below:

i) RAINFED FARMING PROJECTS (RFP)

KRIBHCO is implementing Rainfed Farming Projects in Western and Eastern India. These projects aim at improving the livelihood of the poor families in the target areas through farming systems development and research, institution building and beneficiary participation for ensuring sustainability and replicability. Both these projects are being implemented in technical and financial collaboration with the Department for International Development (DFID) of the British Government. The Western India project, which was launched originally for 5 years on 1.1.93, has been extended upto March 1999. Out of the total project cost of Rs.19.05 crore, DFID would fund Rs.17.52 crore and Rs.1.53 crore will be funded by KRIBHCO. The project is being implemented in the districts of Panch Mahal (Gujarat), Jhabua (Madhya Pradesh) and Banswara (Rajasthan). This project is to be continued by 1.4.99 in the shape of RFP Phase-II for which the project grant agreement is under discussions. The Eastern India project is for a period of 5 years beginning from 1.4.1995 which has been extended till March 2003. The total project cost is Rs.38.66 crore, out of which Rs.36.41 crore would be funded by DFID and Rs.2.25 crore by KRIBHCO. The project is being implemented in 12 districts of West Bengal, Orissa and Bihar in a phased manner.

ii) INDIAN FARM FORESTRY DEVELOPMENT COOPERATIVE PROJECT (IFFDC)

The Project is being implemented by IFFCO since 1.4.1995 in six districts of Uttar Pradesh, Madhya Pradesh and Rajasthan with the help of grants received from Indian Canada Environment Facility (ICEF) from April 1, 1995. The duration of the project is five years. The main objective of this Project is to improve the productivity of degraded lands for the benefit of rural poor by the application of farm forestry systems through village level cooperative societies and also to reclaim wastelands and marginal agricultural lands. Under the Project, 90 Primary Farm Forestry Cooperative Societies will be organised and 20,000 hectares of area will be brought under afforestation. The total project cost will be Rs.35 crore out of which Rs.31.5 crore is being contributed by ICEF and Rs.3.5 crore by IFFCO.

iii) ENVIRONMENT IMPROVEMENT IN RAINFED AREAS PROJECT (EIRAP)

Indian Potash Limited (IPL) has been implementing the Project since 1.12.1995 in Chhindwara District of Madhya Pradesh and Amravati District of Maharashtra. The aim of the project is to conserve, develop and manage natural resources for sustainable improvement in environmental quality through people’s participation. The estimated cost of the project, which will come to an end on 31.12.1999 is Rs.16.70 crore, of which Rs.14.60 crore is to be funded by ICEF and Rs.2.10 crore by IPL.