CRITERIA OF ESSENTIALITY

The criteria of essentiality put forth by Arnon and Stout.

In the nature there are nearly one hundred and three elements. Of them nearly ninety
elements are taken in by the plants. In order to distinguish the elements which are essential
from those which may be taken in by the plants but are not essential, Arnon (1954) has laid
down the following criteria.

1. The plant must be unable to grow normally or complete its life cycle in the absence of
the element.
2. The element is specific and cannot be replaced by another.
3. The element plays a direct role in plant metabolism.

This paved way for formulation of fertilizers to add nutrition into plant, and hence fertilizer
industry.

FERTILISERS
A chemical or natural substance added to soil or land to increase its fertility. The fertilizers
help meet the need of food, fiber, fuel and feed for our growing population. Deficiency of
plant nutrients in soil is on rise. To replenish the same for ensuring food security, use of
fertilizer is indispensable.

CLASSIFICATION OF FERTILISERS
A. On the basis of nutrient available
1. Straight fertilizer- Urea
2. Complex fertilizer- Ammonium phosphate
3. Mixed fertilizer- Mixture of two or three straight fertilizers
B. On the basis of form of fertiliser
1. Solid – powder ,granules , supergranules , briquittes
2. Liquid
C. Type
1. Nitrogenous fertilizer-Ammoniacal, Nitrate, Amide
2. Phosphatic fertilizer- Superphosphate
3. Potassic fertilizer- Potassium sulphate
4. Secondary fertilizer- Magnesium and Calcium
5. Micronutrients- Fe ,Zn , Mn , Cu, B , Mo
D. Micronutrients
1. The term micronutrient or trace element is quite often used interchangeably
though most of the scientists prefer to use the term micronutrients to denote the
elements which are essential for the plant but are required in small amounts.
2. They are constituents of enzymes and co-enzymes.
3. The micronutrients essential for green plants are iron, copper, manganese, boron,
zinc, molybdenum and chlorine.
 4. Sources: The main source of micronutrients in soil is the parent material. The
micronutrient content of the soil entirely depends on the rocks from which the
parent material is derived; soil forming processes, additions and removals.
5. Cobalt, Nickel and copper are preferentially attached to more basic rocks.
6. Zinc has a greater tendency to be associated with sulphides.
E. Biofertilizers:
 Biofertilizers are the substance that contains microorganism’s living or latent cells.
 Biofertilizers increase the nutrients of host plants when applied to their seeds, plant
surface or soil by colonizing the rhizosphere of the plant. Biofertilizers are more cost-
effective as compared to chemical fertilizers.
 Biofertilizers or Bioinoculants are preparations containing living microorganisms
such as nitrogen fixers or phosphate solubilizers, which are useful for agricultural
production.

Bacterial biofertilisers:
Since most of the pulse crops are grown without supply of inorganic nitrogen (chemical)
fertilizers, their growth is dependent on the supply of combined nitrogen by nitrogen
fixing bacteria. Rhizobial inoculants production involves isolation of efficient strains of
Rhizobia, culturing of strains specific for a particular crop in shake flasks or fermentors
and mixing of peat. The mixture is allowed to be cured for a short period and then packed
in sterile polythene bags. The packets are then used for inoculating the seeds before
sowing. Azotobactor and Azospirillum inoculants are also produced on the same principle
and used for non leguminous crops.

Cyanobacterial Biofertilisers:
The Blue green algae are also being produced on large scale and used as biofertilizers in
rice cultivation. The efficient strains are cultured in open plots with water containing
adequate amounts of mineral nutrients such as phosphate and molybdate. After sufficient
growth is obtained, the algal mat is collected from the plot, dried and used as inoculant.
Cyanobacteria can also be grown directly in the paddy field before the transplantation of
rice plants. Azolla, a symbiotic association of a small fern with blue green algae is also
used as a biofertilizer and green manure for rice cultivation.

Fungal biofertilisers:
Some fungi grow in association with roots of plants. Vesicular aurbascular Mycorrhizae
help in supplying of phosphorus to the crop plants in addition to helping the plant in
different ways. VAM fungi like Glomus, Gigaspora etc. are used as fungal biofertilisers.

GLOBAL FERTILISER INDUSTRY

1. The global fertilizer market is expected to value at 155.8 billion $ with a CAGR of 3.8%
2. In 2018 Asia – pacific had a major market share of 60% of overall market
3. In 2016 the fertilizer industry faced challenges like depressed crop prices ,uneven global
nutrient demand, raising market competition
4. There is growing demand for micro nutrient fertilizers as the field trails proved that
application of micro nutrients increased crop yield from 8% to 20% annually.
5. T h e f e r t i l i z e r

expected to register a CAGR of 3.8%, during the forecast period (2019-2024).

6. In 2018, Asia-Pacific was the largest geographical segment of the market
studied and accounted for a share of around 60% of the overall market. 
7. The fertilizer industry was heavily challenged in 2016.
Global fertilizer market summary 8. It was

200
180
Value in USD billion

160
140
120
100
80
60
40
20
0
2019 2024
Year
confronted with uneven global nutrient demand, soft economic prospects,
depressed crop prices, rising market competition, and volatile energy prices.
9. This combination created high uncertainty in the fertilizer market throughout
the year.
10.Since 2012, a sustained downturn in the world consumption of fertilizer market,
coupled with decreasing crop prices, mainly in the United States and Asia -
Pacific, has made it difficult to maintain consistent growth.
11.The major technological innovations in the industry, along with growing
demand for bio-based and micronutrient fertilizers, are expected to drive the
market. 
12.However, regulatory and environmental constraints and high production cost
are likely to act as drawbacks in the industry.

INDIAN FERTILISER SECTOR

1. Fertiliser sector constitutes the backbone of Indian agriculture industry.
2. Government has played a very active role in the evolution, marketing and development of
fertiliser industry in India.
3. Fertiliser is not only one of the most capital-intensive industries but its marketing
ecosystem is also one of the most complex in the Indian context.
4. Fertiliser marketing in India is very much different from other agricultural inputs are
marketed.
5. To ensure equitable supply of fertilisers at a price which most of the farmers can afford,
government of India regulates the various facets of this industry especially for
nitrogenous fertilisers.
6. For urea fertiliser majority of marketing mix is determined not by organisations
manufacturing and marketing it but by policy makers in government.
7. It started with setting up of first Single Super Phosphate (SSP) manufacturing unit in
Ranipet near Chennai with a capacity of 6000 MT a year.
8. Fertilisers, especially nitrogenous fertiliser (Urea) remain one of the few highly regulated
industries in India. Prices (retention pricing), subsidies, distribution restrictions, imports
and even choice of technology, feedstock are controlled/regulated by the government. 
9. India's green revolution in late sixties gave a boost to the sector and presently India is the
third largest fertilizer producer in the world. The total capacity of fertiliser industry as on
30th March 2003 reached 121.10 lakh metric tonne of nitrogen and 53.60 lakh metric
tonne of phosphatic nutrient13. Presently there are 57 large fertilizers plants in the
country producing urea, DAP, Complex fertilizer, Ammonium Sulphate and Calcium
Ammonium Nitrate.
10. Application of fertilisers have helped transform agriculture sector in India from being
dependent on food grain imports before independence to a stage of self-sufficiency.
11. There are signs that the fertiliser pricing mechanism is being reviewed, imports
liberalised, tariff rates revised and measures being debated to lower fertiliser subsidies.
But, it is a very complex decision, as it will affect millions of farmers and any change that
might happen be will in the gradual increment form in case of extreme compulsion.
12. Phosphatic and potassic fertilisers were decontrolled in August 1992. This policy measure
has widened the ratio in which urea (relatively cheaper fertiliser) is applied by the farmers
 in comparison with phosphorous and potassic fertiliser (which are costly because of their
deregulation and non-provision of subsidy support for them).
13. India is the 3rd largest producer and consumer of fertilizers. Overall production of
fertilizers during FY18 has been 413 LMT.
14. India is the third largest fertilizer user in the world, average rate of fertiliser consumption
is 90 kg/ha (65% as N, 25% as P2O5, 10% as K2O).
15. UP is largest market for all fertilisers combined. AP is at 2nd position and Punjab has
third position.
16. Fertiliser consumption in per hectare terms is highest in Punjab. Andhra Pradesh has
second position, Haryana third and Tamil Nadu comes as close fourth. Uttar Pradesh, is at
fifth position.
17. UP is largest market for nitrogenous fertilisers, Andhra Pradesh at 2nd position and
Punjab has the third position.
450
400
350
300
Total
250 production(LT)
200 Total Urea(LT)
150 Total non-Urea(LT)
100
50
0
2015-16 2016-17 2017-18
18. For phosphorous fertilisers, Andhra Pradesh is the biggest market, Karnataka at 2nd and
Maharashtra at 3rd position. Tamil Nadu comes at fourth position, Uttar Pradesh comes at
fifth position and Punjab at tenth position.

Production of fertilizers in India

 900
800
700
600
Total
500 consumption( LT)
400 Urea(LT)
300 non-urea(LT)
200
100
0
2014-15 2015-16 2016-17

SWOT ANALYSIS OF THE FERTILISER INDUSTRY

Strengths
1. Rapidly expanding industry
2. Essential industry to ensure food security of the population
3. No ecological destruction or negative impact

Weakness
1. Low availability of inputs and high cost of production
2. Insufficient production and export requirements.
3. Capital intensive
4. High R&D investment

Opportunity
1. Improved quality and nutrient composition
2. Innovative methods (better productivity per unit), Fertigation
3. Globalization, Mergers and acquisition.
4. Increased export potential.

Threats
1. Govt. Policies and changing compellations for pricing policy
2. Less innovators hence difficult for new entrant
3. High uncertainty ( rainfall driven industry)
4. Increased attention for organic and zero budget farming.
PORTER’S FIVE FORCES ANALYSIS OF THE FERTILISER INDUSTRY
Competitive Rivalry
MEDIUM

1. Crop protection companies sell and purchase same product which has no substitute.
Hence, competition among them is not very profound.

Threat of potential entrants:

HIGH

1. High Capital needed

2. High production cost
3. Uncertainty in receipt of subsidy

Threat of substitute products:

LOW

1. Call for organic and zero budget farming.

Bargaining power of supplier:

LOW

1. Large amount of imported fertilisers

2. Very high scope of customer switching product.

Bargaining power of consumers:

HIGH

1. Growing agri-input companies

2. Moderate use of fertilisers
3. Low productivity through alternates/substitutes
4. Undifferentiated product

NEEM COATED UREA

1. Slow down the process of nitrification of urea and reduces the pollution of ground
water.
2. Govt. has mandated all the indigenous producers of urea to produce 100% of urea as
neem coated urea.
3. National Fertilizers Limited-process of production of neem coated urea on
commercial scale
4. Reducing pollution of air and soil as well
5. At least 75% of domestic urea should be neem coated as per GOI
6. In January 2015, GOI allowed urea producers to producers as much as 100% Neem
Coated Urea
7. Lower underground water contamination due to leaching of nitrogen
8. Helps plants gain more nutrient resulting in more yield
 9. Coating of urea by neem oil is cheap Nitrification inhibitor

GOVERNMENT REGULATIONS

Fertilizer Control Order:

To ensure adequate availability of right quality of fertilizers at right time and at

right price to farmers, the Fertilizer was declared as an Essential
Commodity and Fertilizer Control Order (FCO) was promulgated  under
Section 3 of Essential Commodities Act,1955 to regulate, trade, price, quality
and distribution of fertilizers in the country.  The FCO provides for compulsory
registration of fertilizer manufacturers, importers and dealers, specification of
all fertilizers manufactured/imported and sold in the country, regulation on
manufacture of fertilizer mixtures, packing and marking on the fertilizer bags,
appointment of enforcement agencies, setting up of quality control laboratories
and prohibition on manufacture/import and sale of non-
standard/spurious/adulterated fertilizers. Accordingly there are 74 Fertilizer
Quality Control Laboratories in the Country which includes 4 set up by Central
Government as CFQC&TI, Faridabad and its three Regional Laboratories.

Deregulation of Urea:

Government has decided to remove its control from Urea pricing. Finance
minister said that it is important for the growth of the country as around 66000
crore rupee is invested as subsidy for urea. Government has also said that this
will check injudicious use of fertilizer which is degrading soil productivity and
fertility. After deregulation of urea the FDI will also rise. Fertilizer industry was
demanding for this since a long time.

Nutrient Based Subsidy:

Nutrient Based Subsidy (NBS) for fertilizer was initiated in year 2010. Under
this scheme, a fixed amount of subsidy decided on an annual basis is provided
on each grade of subsidized Phosphatic and Potassic fertilizers, except for Urea,
based on the nutrient content in them.
The cabinet committee on Economic Affairs has approved the proposal of the
Department of Fertilizers for the continuation of Nutrient based Subsidy till
2019-20. This will ensure that adequate quantity of P& K is made available to
the farmers at a statutory controlled price.
Aims of NBS:
 The scheme aims at ensuring that sufficient quantity of P & K is at the
farmer’s disposal at statutory controlled prices. So that the agricultural
growth can be sustained and balanced nutrient application to the soil can be
ensured.
 It also aims at ensuring balanced fertilizer use, improving agricultural
productivity, and growth of indigenous fertilizer industry.

Direct Benefit Transfer:

• The proposed DBT system entails 100% payment of subsidy to the fertilizer
manufacturing companies on the basis of actual sales by the retailer to the
beneficiary
• The sales to the beneficiary are captured through the point of sale (pos)
machines installed at the retailer’s end.
• All the fertilizer sale transactions are captured online in the integrated fertilizer
management system (IFMS) on real time basis.
Fund transferred in FY 2018-19: 39,230crores

RECENT ISSUES
1. https://www.thehindubusinessline.com/economy/agri-business/indian-fertiliser-sectors-record-
on-water-pollution-is-a-cause-for-concern-cse/article28756903.ece
2. https://www.financialexpress.com/opinion/only-decontrol-can-solve-ureas-problems-heres-
how/1661166/
3. https://www.globenewswire.com/news-release/2019/08/14/1901564/0/en/APAC-controlled-
release-fertilizer-market-to-surpass-USD-2-billion-by-2024-Global-Market-Insights-Inc.html
4. https://weather.com/en-IN/india/news/news/2019-07-31-indian-fertiliser-industries-among-
most-climate-friendly-world
5. https://qbnnews.com/2019/08/21/potassium-chloride-market-high-demand-from-fertilizers-
sector/
6. https://www.financialexpress.com/economy/dbt-of-fertilizers-subsidy-the-last-mile-to-
walk/1662938/