Fertilizers are critical to India’s green revolution achievement and subsequent self-sufficiency in food grain production. The increasing use of fertilizer has made a substantial contribution to the country’s ability to produce food grains in a sustainable manner. As a result, over the last few years, the demand for fertilizers has increased by double digits. Sanjay Jain Jyoti Trading talks about the growth factors of the fertilizer sector.
Food demand is predicted to grow rapidly over the next five years, fuelled by a considerable increase in the country’s population. Fertilizers are expected to play a significant influence in raising average agricultural yields per hectare. There are several factors on which the growth of the fertilizer sector is dependent, both directly, and indirectly.
First and foremost, arable land has continued to shrink as urbanization spreads across the country. With the loss of total arable land, India’s farmland has become more fragmented. This was primarily due to their distribution. Increased crop intensity has resulted from the fragmentation of farmland. Fertilizers will be widely employed as more farmers use various inputs such as fertilizers to attain the same level of yield with the same or even less arable land. This downward trend in arable land is projected to continue, as is the rise of the fertilizer sector.
Furthermore, according to the 2011 census, India’s population was 1.21 billion, which is predicted to expand. As the population grows, so does the demand for food. Sanjay Jain Jyoti Trading states, “Between 2014 and 2017, per capita food consumption increased by 1 percent, rising from 2,442 kcal per capita per day to 2517 kcal per capita per day. Food consumption has increased as a result of higher disposable income and improved food security.” He continues “The agriculture industry is likely to be strained as a result of this increase in consumption. Agriculture must meet this need for food, and because fertilizer is a crucial ingredient in agriculture, growth in the agriculture business will stimulate growth in the fertilizer industry in India.”
And, India’s per capita income has risen in both urban and rural areas. From Rs 63,462 in 2011-12 to Rs.94,556 in 2019-20, the per capita income has grown. Factors such as the introduction of the one rank one scheme and low inflation will push up disposable income, allowing for increased domestic spending. A rise in disposable income would lead to an increase in spending power, boosting demand. Credit from non-food banks has risen in tandem with per capita income. Credit has grown at a 10-11 percent compound annual growth rate (CAGR). Sanjay Jain Jyoti Trading suggests, “Farmers in rural regions have been encouraged to employ farm inputs such as seeds, fertilizers, and insecticides as their income have increased and finance has become more readily available.”
It is a fact that many of the essential fertilizers in India are subsidized. Portion of the total price is borne by the government. Widely used fertilizers like urea is highly subsidized. Subsidy bill of the government has steadily increased from FY2017 to FY 2020 with a CAGR of 12.4 percent. The subsidy allocation in fiscal 2021 including the allocation under Atmanirbhar 3.0 package stands at 1.36 trillion which is the highest amount in recent years, Sanjay Jain Jyoti Trading. The government provides subsidies to fertilizer considering its criticality to agricultural produce.
With the food demand growing rapidly due to the considerable increase in the country’s population, fertilizers are expected to play a significant role in rising average agriculture yield. It is an input that can help boost agriculture output and make the country self-sufficient in food grain production.
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