Fertilizers

Why Govt launch ‘One Nation, One Fertilizer’ single ‘Bharat’ brand?

Why Govt launch ‘One Nation, One Fertilizer’ single 'Bharat' brand under PMBJP

Why Govt the launch the ‘One Nation, One Fertilizer’ single ‘Bharat’ brand under PMBJP?

The government launched the Pradhanmantri Bhartiya Janurvarak Pariyojna (PMBJP) initiative, under which all fertilizer products will be sold under a single ‘Bharat’ brand beginning October 2, with no political controversy or industry opposition. Given the government’s track record, this is extraordinary.

The painstakingly designed strategy and its launch date clearly show the government’s determination to achieve it at any cost, as the political returns might be significant.

Not a hasty decision

‘This is not a hasty move; the administration has been consulting with industry for some time.’ It makes no difference to us because the country is not self-sufficient in fertilizer and whatever is generated is always sold,’ explained KS Raju, Chairman of the Fertiliser Association of India (FAI). According to him, the government felt that farmers should be aware of the financial burden involved in providing farmers with cheaper fertilizers such as urea, DAP, MOP, and complex.

Also Read | ‘Single fertilizer brand’ destroys our brand value, market distinction: Industry.

Approximately 80-90% of the cost of fertilizer manufacturing is given to fertilizer producers in the form of government subsidies, whereas corporations used to sell the product under their own brands without revealing the government’s role. Initially, the intention was to debut one brand in stages, beginning with urea, but at the top level, it was decided to roll out the strategy for all goods at the same time, according to sources.

Reduced transportation subsidies

Another reason for the introduction of single-brand fertilizer is to minimize transport subsidies, which are estimated to be worth over ₹6,000 crores per year and are entirely passed on to firms in order to keep retail costs under control. Though the government has been changing the laws about where fertilizers can be sold from the location of a plant, some corporations continue to sell them at different locations where other factories are located.

For example, indigenous urea generated by a plant in Uttar Pradesh is moved to Rajasthan, and urea produced by a plant in Rajasthan is moved to Uttar Pradesh, whereas no such basis exists.

The industry is illiterate

Raju stated that the sector will not object if the government secures fertilizer sales by designating a quantity to specific states, as long as it covers any drop in demand in a specific region in the event of a drought year.

However, the industry is unsure how the marketing will be carried out and who will shoulder the cost, as several manufacturers have voiced reluctance to spend money on a brand they do not own. ‘Once in a while, certain companies may tolerate the expenditure,’ one industry official said, ‘but it will be tough to spend continually on commercials if the brand value for that company is zero.’

A day after the Cabinet authorized potash and phosphorous subsidies in April, three companies placed advertising in newspapers thanking the government, according to sources.

Government officials further say that the shift to single branding will help prevent the diversion of roughly 10 lakh tonnes (lt) of urea for non-agricultural usage, which is anticipated to cost the government ₹6,000 crores.

Also Read | ‘One Nation, One Man, One Fertilizer’ Congress slams Govt’s single fertilizer brand.

The Centre has set the nitrogen subsidy for the current Kharif season at ₹91.96/kg (up from ₹18.78/kg the previous year), phosphorous at ₹72.74/kg (₹45.32), potash at ₹25.31/kg (₹10.11), and sulphur at ₹6.94/kg (₹2.37).

In 2021-22, India’s annual domestic use of urea was 333 lakh tonnes (lt), a 5% decrease from the previous year. While around 260 lt were generated locally, approximately 91 lt were imported. Because of high overseas prices, the government’s annual fertilizer subsidy expenditure is expected to exceed ₹2 lakh crore this fiscal, despite a budget allocation of ₹1.05 lakh crore.