Distribution System

Fertilisers are essential inputs in agriculture and, in particular, production of foodgrains. The marketing system has to carry out the functions of storage, transportation and selling to the farmers spread throughout the country. It includes wholesalers, agents, and retailers. Over time the marketing system for fertilisers has undergone rapid change both in terms of its capacity and mode of operation. Its evolution has been mainly guided by the public policy. Since fertiliser was a new input for the farmers, the spread of know-how and incentives had to accompany the marketing of fertilisers. Initially the demand for fertiliser had to be created. It was to increase agricultural production and not only to sell more fertilisers. Up to the end of the First Five Year Plan (1951-56) the sale of chemical fertilisers was the sole responsibility of co-operative societies and State Agriculture Departments. Later, the Government allowed the fertiliser production units, which had been licensed before December 31, 1967, to sell 70% of their produce through their own agencies for a period of seven years from the date of commencement of production. The remaining 30% of the production was required to be sold through public or co-operative agencies.

During the early seventies, the proportion of private sector sale points increased at a faster rate but slowed down in the later half of seventies. However, during the eighties, the private sector fertiliser outlets have expanded at a rate higher than that of the co-operative or the public sector. At the end of March 1995, there were 2.59 lakh sale points of fertilisers in the country, out of which 69% were in the private sector and remaining 31% were operated by either co-operative societies or other public sector institutions like State Agro-Industries Corporations. In order to make available the fertilisers to farmers, the temporary sale points are also provided in some areas.

Constraints in Fertiliser Marketing

  • The numbers of sale points are still inadequate farmers in hill and desert areas have to travel long distance to buy the fertilisers.
  • The supplies of the fertilisers at many sale points are not sufficient to meet the demand for fertilisers in the area.
  • At many sale points, the fertilisers are not stocked at a time when farmers want to purchase. For e.g., if the supplies to the sale point do not reach before the sowing of crops, the farmers are not able to buy the fertiliser, which they wish to use as basal dose.
  • Sometimes the makes and grades of the fertilisers, which the farmers wish to buy, are not available at the nearest sale point.
  • Fertilisers are prone to adulteration and several cases of adulteration have been reported.
  • Sometimes, the quantity of fertilisers in the bags is less than the specified one.
  • When the supply is less than the demand for fertilisers in an area, during a specified season, the dealers charge a price higher than the statutory or normal price.
  • Sometimes, the farmers are forced to buy another kind of fertiliser along with the kind desired by them.
  • Farmers in many areas do not have cash to pay for the fertilisers. Short term loan or crop loan from the banks is meant to meet this requirement.
  • In many areas, the salesmen do not possess the requisite know-how on the use of fertiliser which farmers wish to seek from them.
  • During the last few years, there has been a considerable ad hocism in fertiliser pricing policy, which came in the way of adequate availability of fertilisers to the farmers in time.

Improvement for Fertiliser Marketing

  • There is a need to increase the number of sale points specially in hilly, tribal and desert areas so that the farmers have not to travel much distance to buy the fertiliser.
  • There is also a need to develop proper distribution arrangements involving a combination of co-operatives, government and private agencies, depending on the potential of the area.
  • Sales points should be developed into good agro-service centres. Providing advice to the farmers on different aspects of fertiliser application in addition to making the fertiliser, other inputs and services available.
  • Packing material and technology for fertilisers should be improved to minimise the chances of loss during transit and storage as also of pilferage from the bags.
  • The procedure of linking credit with fertiliser supply should be simplified.
  • Fertiliser should also be made available in smaller packets of 5 to 10 kg.
  • There is need to check adulteration and under weighment of bags.
  • There is also a need to minimise the number of brand names to avoid confusion among the farmers specially those who are illiterate or have poor educational level.
  • The ratio of prices of three nutrients (NPK) should be maintained at levels consistent with the normative use under different cropping patterns and soil conditions.


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