Explained: The One Nation One Fertilizer scheme, the Govt’s logic, and some immediate risks

Source: The post is based on the article “Explained: The One Nation One Fertilizer scheme, the Govt’s logic, and some immediate risks” published in Indian Express on 26th August 2022.

What is the News?

The Ministry of Chemicals and Fertilizers has decided to implement One Nation One Fertiliser by introducing a “Single Brand for Fertilizers and Logo” under the fertilizer subsidy scheme named “Pradhanmantri Bhartiya Janurvarak Pariyojna”(PMBJP).

Note: PMBJP is the scheme under which the Central government grants subsidies annually to fertilizers.

What is the “One Nation One Fertiliser” scheme?

Under the scheme, all fertiliser companies in the country have to sell their products under the brand name of ‘Bharat’.

This means that all fertilizer bags whether containing urea, diammonium phosphate(DAP), or NPK will have the prefix Bharat – for instance, ‘Bharat urea’, Bharat DAP’, ‘Bharat NPK’ and ‘Bharat MOP’ – irrespective of whether it is manufactured by a public or a private player.

The companies have been 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.

What is the government’s argument for introducing this scheme?

The maximum retail price of urea is currently fixed by the government, which compensates companies for the higher cost of manufacturing or imports incurred by them. 

Apart from subsidizing and deciding at what price companies can sell, the government also decides where they can sell. This is done through the Fertilizer (Movement) Control Order, 1973. 

Hence, when the government is spending vast sums of money on fertiliser subsidies, it would obviously want to take credit and send that message to farmers.

What can be the drawbacks of this scheme?

Firstly, it will disincentivise fertilizer 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.

Secondly, currently, in case of any bag or batch of fertilisers does not meet 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.