CHANGING FACE OF THE FERTILIZER INDUSTRY

The Changing Face of the Fertilizer Industry

Rahul Mirchandani
Executive Director, Aries Agro-Vet Industries Limited

Soil health and productivity are the key to the sustainability of agriculture,
particularly in developing countries. The International Board for Soil Research and
Management (IBSRAM) estimates that around 10-20 per cent of cultivated soils
would be degraded by erosion and pollution within 15 years. A further five per cent
of the best agricultural land could be lost to urban spread during that period. These
factors, coupled with the effects of climate change and the food demands of a further
1.5 thousand million people, will create tremendous pressure to make better use of
good soils and to improve less productive land, using Integrated Crop Management
Practices & Specialty Nutrition Solutions1.

It is essential for the Fertilizer Industry in India to understand and appreciate the
key trends that are changing the face of the farm economy in India. A clear
understanding and appreciation of these trends will help shape strategies for the
future. When looking at trends, they can be categorized into Key Certainties and Key
Uncertainties that have an impact on Business Performance.

Let us first look at some Key Certainties and their impact on our Industry –

Continued dependence on the Monsoons

The past few years have seen the continued effect of the El Nino phenomenon and
pronounced effects of continued global warming and consequent climate change. The
Met Department estimates that 80% of India today is drought prone. Growth of
irrigation and water management practices are woefully inadequate. India’s
agriculture is still completely at the mercy of the Rain Gods. Changing seasons are
now more of a certainty. It is imperative that Indian agriculturists brace themselves
to meet this ‘certain’ uncertainty.

Impact –
Recent campaigns by International organizations and government policy initiatives,
including subsidies and extension services, have led to the slow but steady rise in
practices like drip irrigation, hydroponics and greenhouse cultivation. This reduces
phenomenally the need for water in agriculture and promotes conservation of this
scarce resource. It also makes farming more productive with the delivery of the right
quantity of nutrients at the right time, in the least available cost, using the optimum
volume of water. Moreover, rainwater harvesting projects are penetrating the
hinterland. Agro-forestry initiatives, wasteland cultivation using hardy crops needing
least quantity of water, are also underway to reduce the dependence on the
monsoons, while at the same time, sustaining revenue from agricultural land.

These new generation cropping systems and fertilization techniques necessitate the
use of water soluble, specialty fertilizers. Traditional fertilizers are incompatible with

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Specialty Plant Nutrition Solutions include Water Soluble NPK Complex Fertilizers, Chelated &
Inorganic Micronutrients (Zn, Fe, Cu, Mn, B, Mo) and Secondary Nutrients (Ca, Mg, S).

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the equipment used in these practices. This obviates the use of specialty nutrition
solutions and hence, has a direct impact on industry demand.

Change in eating habits of Indians

India is growing in affluence. This affluence is not just restricted to cities having a
middle class with ever growing purchasing power, but also covers rural areas.
Reports of the Indian Market Research Bureau (IMRB) estimate that 49% of Rural
India figures in the middle/upper income segments. Increased affluence has led to
an increased demand for more nutritive foods, including fruits and vegetables, in
addition to staple cereals and pulses. Vegetarianism is also growing in popularity, as
is the recent trend the world over. This change in eating habits has made it feasible
for farmers to diversify into horticultural crops.

Horticultural crops have relatively high nutrient requirements. Moreover, they are
also labour intensive to cultivate.

Impact –
Employment generation – leading to increased incomes, increased living standards,
increased consumption – causing a growth in demand for farm produce.

Horticulture requires intensive agriculture, which can only be sustained through the
proper use of balanced fertilization and integrated crop management systems. This
requires the use of specialty nutrition solutions and hence, has a direct impact on
industry demand.

Growing Access to information

Awareness is increasing, as a direct corollary to increasing literacy. 3% (1066 lakh

households) are estimated to have at least 2 graduates. 16% have at least one
member who is SSC/HSC+ 2 . This is equivalent to 5 times the population of
Singapore, 3 times Israel and a little less than all of Australia.

A wealth of scientific knowledge about soil chemistry and physics exists, as well as
extensive geo-data on the distribution of soil types. Thanks to modern technology,
this information can be brought directly to communities and service providers
through rural tele-centres, electronic information resources and other media
including video presentations. The “digital divide” remains a very real constraint, but
the rapid spread of mobile phones and satellite technologies opens new vistas for
extending access to relevant knowledge. In fact, the communications revolution has
comprehensively networked Rural India. Apart from leapfrogging directly into the era
of mobile telephony, 70% of farmers have access to televisions and an even higher
86.8% listen to the radio. This has “opened up” the farmer’s world and has ensured
growing access to relevant information.

Impact –
The growing awareness has created “pockets of excellence” in Indian Agriculture –
areas where ‘progressive farmers’ are open to using new ideas, technology and
innovative crop management principles. This has led to a breakdown in orthodoxy
and is a golden opportunity to showcase the immense cost-benefits of specialty

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Indian Market Research Bureau (IMRB) Reports

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farming (For a detailed cost benefit study, see trial report summarized later in this
article).

Now, coming to the Key Uncertainties facing the Fertilizer Industry –

Interlinking India’s Rivers

The idea of linking India’s rivers which had been lying dormant for a long time, has
acquired prominence recently with the Supreme Court having decreed that the rivers
of India shall be linked within ten years3. A task force has been set up to work out
the modalities of this largest, most ambitious infrastructure project on Earth. The
Court has also mandated the allocation of the Rs. 5,60,000 crores required for this
project.

However, the uncertainty in the entire issue stems from the vociferous debate raging
in “green” lobbies that have christened this project as “technological arrogance of the
worst kind” while making an attempt to alter India’s geography. Other constraints
include finding a source for collecting the mandated funds, environmental impact
assessment, cost benefit analyses and investment feasibility.

Impact –
It is uncertain whether India’s rivers will be linked in as grandiose fashion as decreed
by the Courts or thought of by planners. However, it is certain that limited links will
be created in a definite time frame. For instance, work on the Krishna-Godavari river
link within Andhra Pradesh has already begun. The benefits are obvious: Water
Management, Flood Control, Reduced dependence on the Monsoons, Growth of
Irrigation, Drought Resistance, Increase in area under cultivation and Employment
Generation.

Irrigation is undoubtedly the key to India’s economic future. The linking of rivers will
assure availability of water for agriculture, guarantee crop cycles, reduce
uncertainties in agriculture, unify the country and ensure prosperity for generations
to come.

Harvests can be sustained in the long term with Intensive use of land only if crop
nutrition is balanced. Specialty fertilizers ensure this is achieved in the most cost-
effective manner possible. Moreover, increased land under cultivation means a
definite increase in the demand for ‘plant food’.

Growing usage of Genetically Modified Seeds

It is commonly said that if the last decade was one of Information Technology (IT),
then the next decade will be one of Bio Technology (BT). India is known as a
potential future bio tech hub for the world.

Seeds constitute, on average, 60% of the Input costs for farmers. Use of genetically
modified (GM) high yielding varieties of seeds has the potential to usher in the ‘Next
Green Revolution’. The farmers in the USA have adopted GM seeds on a large scale
leading to an estimated benefit of USD 6 billion. Our neighbour, China, similar to us
in almost all respects, has achieved remarkable productivity increases of 30 to 40%
from the use of GM seeds. However, lack of political will, myopic views of scientists

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River Links Dialogue - Background Papers

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on the “perceived” ill effects instead of on demonstrated bio safety risks and
cumbersome procedures have worked to ensure that India has effectively missed the
Genetic Revolution.

Fortunately, the pendulum has finally swung in favour of adopting GM seeds starting
with non edible cash crops (like Bt cotton) and then hopefully, Indian farmers will be
allowed move with caution towards food crops. Uncertainties exist now more with
regard to the speed and extent of adoption of new-generation seeds.

Impact –
Agri biotechnology has proved useful to farmers to increase yields, controlling pests,
insects, weeds, creates drought resistance, flood resistance and allows cultivation in
“stressed” soils. Genetically modified seeds promise high yields. However, for crop
productivity to be sustained, nutrition requirements are relatively much higher than
traditional seed varieties. These is also a trend amongst marketers of GM seeds to
recommend a package of practices with regard to plant protection and plant nutrition
long with seed kits. Nutritional solutions recommended are almost always specialties
due to their demonstrated effectiveness the world over. Growing awareness towards
using GM seeds will directly affect the demand for specialty balanced fertilizers.

Impact of the WTO Agenda

India’s commitment to the WTO is that “quantitative restrictions on imports and

exports will be phased out in the course of the next few years”. This will imbibe
considerable uncertainties on the Indian agriculturalists. Two sets of problems will
emerge. One stems from the fact that Indian farmers have been recording a year-
on-year decline in productivity growth. Secondly, there will be competition from
cheap imports. It is therefore time to shape up our act and create a framework by
which we can make a Global Farmer out of the Indian Kisan.

Impact –
To face the WTO challenge, productivity has to be increased. It is estimated that
there is a potential to increase productivity per unit of land area by 25% just by
using irrigation, value added, cost effective specialty fertilizers and agri-technology,
including GM seeds.

Moreover, to face the challenge of cheap imports, revenue per unit of land needs to
be enhanced immediately along with a reduction in cost of production. This is
possible by using global best practices in integrated crop management, which point
very emphatically towards the effective utilization of specialty crop nutrition solutions.
To face the export challenge, similar economics will come into play. However, there
is a further restriction placed on presence of pesticide residues. To reduce the
rampant over-use of pesticides, the plant will need to be made healthy with balanced
nutrients. This is the only way, other than biological control of pests, to decrease
pesticide use through increasing resistance.

The increased awareness and affluence, change in eating habits causing a change in
cropping patterns, focus on moving towards hardy, remunerative crops requiring less
water, increase in irrigation facilities, growing popularity of genetically modified
seeds, challenges posed by trade liberalization due to the WTO regime, development
of agro processing zone and rapid spread of information on global best practices all
point directly to increasing need for cost effective specialty fertilizers to be made
available at the doorstep of the Indian agriculturists.

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Overall Impact of Key Industry Trends

New Generation High

SUSTAINABLE AGRICULTURE THROUGH

Yielding Hybrid Seeds Intensive agriculture

Growth of Irrigation Reduced dependence on

BALANCED FERILIZATION
unpredictable monsoons

SPECIALTY FERTILIZERS
Access to agro processing

GROWING NEED FOR

& storage facilities
Improved road networks
Move towards horticulture
Access to wider domestic
and international markets
IMPROVE THE
ECONOMICS OF FARMING

Focus on building disease

Reduction in pesticide use
resistance

Government Policy Improving farm gate

Initiatives support prices; extension
efforts; “incentivizing”
Change in eating habits
agriculture

Growing Awareness

Formulating a Balanced Crop Nutrition Programme

In the process of formulating an ideal balanced crop nutrition programme, it is

essential for the farmer to begin with a thorough soil health study. Progressive plant
nutrition companies have equipped their Laboratories to assist farmers in getting an
accurate soil profile with an accurate assessment of nutrient deficiencies. State
Government Soil Testing Laboratories are also providing similar facilities to farmers
at nominal charges.

The next step is to identify and evaluate the various options available to supply
nutrition to the crops. One of the most actively supported techniques is the use of
Organic Fertilizers. This is a concept being actively promoted by the government.

However, it must be noted that organic manure (usually the excretion of animals,
the most popular in India being Cow Dung) has extremely low concentrations of
nutrients present in them. These levels of nutrients (never exceeding 0.89%!) are
not sufficient for intensive farming and high yield. (see table below) Organic manures
are, at best, very effective soil conditioners.

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Nutrient Composition of various types of Organic Manure

Cattle Horse Sheep Chicken

Constituent % % % %
N 0.53 0.55 0.89 0.89
P2O5 0.29 0.27 0.48 0.48
K2O 0.48 0.57 0.83 0.83
Ca 0.29 0.27 0.21 0.38
Mg 0.11 0.11 0.13 0.13
Cu 0.00079 0.00079 0.00079 0.0006
Mn 0.003 0.003 0.003 0.003
Zn 0.0016 0.002 0.002 0.0021
S 0.36 0.36 0.06 0.06
Source: ARIES-EASTEC Seminar Handbook, 2003.

Farming using organic manure is not cost effective in the short and medium term,
because it takes very long for the yield levels to stabilize at sustainable levels. Such
farming is still “luxury farming” and not ideally suited to Indian conditions. This
necessitates the identification and proper use of efficient Chemical or Mineral
Fertilizers that are environmentally safe, stable, cost-efficient and required in
relatively low dosages per unit of land area.

The application of nutrients like Nitrogen (through Urea), Phosphorus (through DAP)
and Potassium (through SOP) is commonplace. These are nutrients required in large
quantities and they are well recognized as major nutrients. In fact, there are several
instances observed of their rampant overuse, which is a serious cause for concern. A
major problem is faced with Urea. Nitrogen in Urea has an immediate greening effect
on the crops and farmers tend to blindly apply Urea as soon as symptoms of
chlorosis appear. The field becomes green overnight and the farmer feels that he has
effectively managed the problem at hand. However, the green fades in a matter of a
few days. This “boot-polish” effect of Urea has led to its unscientific usage and has
upset the nutritional balance, as the excess nutrients applied tend to reduce the
efficiency of uptake of the other nutrients present in the soil, compounding the
problems of deficiencies. Infact, the use of such traditional granular NPK fertilizers
(Urea, DAP, etc) is declining in popularity in all progressive nations of the world.

Progressive farmers are shifting to water soluble complex NPK fertilizers which are a
cost-efficient option. In terms of nutrient absorption, foliar fertilization is seen to be
from 8 to 20 times as efficient as ground application. Foliar feeding is possible very
effectively using the water soluble complexes. Moreover, the numbers of
formulations available are extraordinarily diverse and they supply different
combinations of the nutrients, thus allowing a farmer to custom design the nutrition
programme. This is unlike the very limited combinations available with traditional,
granular NPK fertilizers. These complex fertilizers are highly pure (97.2%-99.8%),
100% water soluble and efficiently absorbed by the crops making them ideal for
foliar fertilization programs at very low doses. In cases where farmers are using
micro-irrigation systems, the only feasible option available is to use such specialty
water soluble fertilizers.

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As far as the micronutrients are concerned, traditional usage of inorganic forms of

micronutrients have their inherent disadvantages. These include the formation of
insoluble salts and acids in the soil after entering into chemical reactions with water,
air, carbon dioxide, etc. upsetting the soil structure and chemistry. Inorganic
nutrients are vulnerable to leaching and fixation rendering them unavailable for
absorption by the crops. Studies indicate that over 60% of nutrients are wasted if
applied in inorganic sulphate forms.

The usage of Chelated forms of Micronutrients is the most effective, environmentally

friendly option available to farmers around the world. A Chelated micronutrient has
the metal ion of the nutrient (Zn, Fe, Mn, Cu, etc.) surrounded by a carefully
designed protective cage structure. This creates an inert organo-metallic complex
ensuring that the nutrient can arrive unharmed and unchanged (by chemical
reactions) at its destination - the crop. Thus, the specially engineered bond formed
between the nutrient and the chelating agent locks in the nutrient ions and provides
optimum agronomic use of the micronutrient.

The Cage Like Structure of a Chelated Micronutrient

High quality Chelates are in use in certain parts of India and have shown extremely
promising results. The yields observed using Chelates in Research trials are
significantly higher. More importantly, the low dosage leads to a reduction in the cost
of application per unit of land area. 1 kilo of a Chelated Micronutrient is seen to give
better yields compared to 20 kilos of an Inorganic form of the same micronutrient.
(see Table summarizing a recent University Research Trial below)

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Summary of Results of Research Trial conducted on Rice

Acharya N G Ranga Agricultural University, Warangal, Andhra Pradesh

Treatment Zinc Chelated Benefit using Chelates

Sulphate Zinc
Dose/ha. 20 kilos 1 kilo Saving in cost of application
Cost of application/ha. Rs. 600 Rs. 560 = Rs 40 / ha.
Yield of rice/ha. 5.02 tons 5.32 tons Additional revenue earned
Farm Gate price per kilo Rs 6 Rs 6 from sale of extra yield =
Per hectare Realization Rs 30120 Rs 31920 Rs 1800 / ha.
Total Benefit : Rs 1840/ha.

(Note: Cost of application is based on average MRPs of the respective sources of Zinc as on
Jan 2005 in A.P. State. Farm gate price of Rice (Oryza sativa) is also reported from A.P. State
for Variety Erramallelu WGL-20471 on which this trial was conducted. The yields and results
reported are a mean of three replications. All other inputs and practices, except the source of
Zinc, were kept constant in the treatments)

In states like Andhra Pradesh and West Bengal, for example, the benefits of using
Chelated micronutrients as part of a balanced nutrient management programme is
widely accepted by the progressive farmers, guaranteeing higher farm productivity.
This awareness needs to spread throughout the country.

The Way Forward

The tools and techniques to ensure the improvement of farm productivity are now
available in India. Companies are investing a great deal on Research & Development
to ensure the availability of such state-of-the-art products and farming systems. The
Universities and Research Institutions have tried, tested and documented the
immense benefits from the usage of such technology. Such Research is continuing
and draws on the favourable experiences of countries around the World.

It is now time to spread awareness. The farmers of India have a right to know that
there are cost-effective specialty plant nutrition solutions available which have the
potential to significantly increase the productivity of their farms. They have a right to
be educated in the efficient usage of such technologies. In return, India can be
assured of a renewed Ever-Green Productivity Revolution in her agriculture sector.

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