Why in news: Union Ministry of Chemicals and Fertilisers issued a memo announcing the implementation of the “One Nation One Fertiliser” scheme under which a single brand and logo for fertilisers will have to be used by all manufacturers under the Centre’s fertiliser subsidy scheme newly renamed as a Prime Minister’s scheme- “Pradhanmantri Bhartiya Janurvarak Pariyojna” (PMBJP).
One Nation One Fertiliser Scheme
Under ONOF companies are allowed to display their name, brand, logo and other relevant product information only on one-third space of their bags.On the remaining two-thirds space, the “Bharat” brand and Pradhanmantri Bharatiya Jan Urvarak Pariyojana logo will have to be shown.
The single brand name for UREA, Di-Ammonium Phosphate DAP, Muriate of potash (MOP) and Nitrogen Phosphorus Potassium NPK etc. would be BHARAT UREA, BHARAT DAP, BHARAT MOP and BHARAT NPK etc. respectively for all Fertiliser Companies, State Trading Entities (STEs) and Fertiliser Marketing Entities (FMEs).
This scheme applies to both public & private sector companies.It will bring about uniformity in fertiliser brands across the country.
he price of the most used fertiliser, urea, is controlled by the government, meaning all manufacturing companies sell at a fixed MRP, which is just 10-20 per cent of production costs. The government provides 80-90 per cent of the cost of production to the manufacturers in the form of a subsidy.
The fertiliser subsidy bill of the government is huge each year (expected to be over Rs. 2 lakh crore in 2022-23) and only second to the food subsidy in terms of expenditure.
For other fertilisers like Diammonium phosphate (DAP) and Muriate of Potash (MOP), while prices are not officially controlled by the government, they do fall under a subsidy system, meaning the manufacturers sell around a tacitly fixed MRP. But companies were until now selling the product under their own brand identity and not that of the government.
What can be the drawbacks of the scheme?
- It will disincentivise fertiliser companies from undertaking marketing and brand promotion activities. They will now be reduced to contract manufacturers and importers for the government. Any company’s strength ultimately is its brands and farmer trust built over decades.
- Currently, in case of any bag or batch of fertilisers not meeting the required standards, the blame is put on the company. But now, that may be passed on fully to the government. Politically, the scheme might well boomerang rather than benefit the ruling party.
What is Fertilizer Subsidy?
The government pays a subsidy to fertiliser producers to make this critical ingredient in agriculture affordable to farmers. This allows farmers to buy fertilisers at below-market rates. The difference between the cost of production/import of a fertiliser and the actual amount paid by farmers is the subsidy portion borne by the government.
Subsidy on Urea: The Centre pays subsidy on urea to fertiliser manufacturers on the basis of cost of production at each plant and the units are required to sell the fertiliser at the government-set Maximum Retail Price (MRP).
Subsidy on Non-Urea Fertilisers: The MRPs of non-urea fertilisers are decontrolled or fixed by the companies. The Centre, however, pays a flat per-tonne subsidy on these nutrients to ensure they are priced at “reasonable levels”. Examples of non-urea fertilisers: Di-Ammonium Phosphate (DAP), Muriate of Potash (MOP). All Non-Urea based fertilisers are regulated under Nutrient Based Subsidy Scheme.
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