Chapter NJD -4 Original File

8/8/2019 Chapter NJD -4 Original File

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Chapter I

INTRODUCTION

Fertilizer sector is very crucial for Indian economy because it provides a

very important input to agriculture. The fertilizer industry in India has played a

pivotal role in achieving self sufficiency in food grains as well as in rapid and

sustained agriculture growth. The growth of the Indian fertilizer industry has

been largely determined by the policies of the central government. The

government exercises extensive control on the price, distribution and

movement of fertilizers.

The history of the Indian fertilizer industry dates back to 1906, when

first fertilizer factory was opened at Ranipet in Tamil Nadu. Since then, there

have been major developments in terms of both the quantity and the types of

fertilizers produced, the technologies used and the feed stock employed.

Feed-Stock Industry

Feed stock industry consists of agencies and power units as well as

utilities, which supply raw materials for fertilizer manufacturing industry.

Lead Fertilizer Supplier (LFS)

Lead fertilizer supplier is a manufacturer who meets or is capable of

meeting the maximum possible requirement of fertilizers for a district and state.

The scheme was introduced in 1986. LFS was to be nominated by Government


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of India in consultation with state government for the state as well as the

district level.

Fertilizer Subsidy

In a free market, a fertilizer manufacturer could have charged the farmer

a price that covers his reasonable cost of production and distribution. Since he

is allowed to sell at a fixed price only, which is low, the balance is made up as

subsidy.

Retention Price

The price paid to the fertilizer industry by the government is fixed for

each plant separately to ensure a percent post tax return on net worth.

STATEMENT OF THE PROBLEM

Nilgiri is basically a horticulture district and the entire economy of the

district depends upon the success and future of horticulture money crops like

Potato, Cabbage, Carrot, Tea, Coffee, Spices, and Fruits.

The total geographical area of this district is 2,54,485 hectares. Against

the total of 2,54,485 the net cultivated area is 79,225 hectares. This district

consists of five taluks. Almost in all taluks, the cropping intensity is 100

percent. It is also observed from the cropping calendar that the demand for

fertilizers in Nilgiri district peaks during the months from February to

September due to the plantation crops. There is demand for fertilizers in all the

12 months of a year.


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Nearly 60 to 80 percent of population depend upon their income to meet

the day to day expenses. But it is proved that an optimum and desirable level of

agricultural production is not possible without the use of chemical fertilizers.

Marketing is the crucial function in fertilizers industry.

As no study on marketing of fertilizers in Nilgiri district has been

conducted by any researcher to the best of my knowledge, I desired to make

such a study. This study on the various aspects of marketing system of

fertilizers in Nilgiri district. This study deals with the marketing functions

performed by the marketing functionaries, marketing channel, marketing

problems faced by the various functionaries in Nilgiri district.

Objectives of the study

This research has been undertaken to the study the following objectives:

i. To study the demand determinants of fertilizers in general and in

Nilgiri district in particular

ii. To know about the extent of awareness among the consumers about

the bio-fertilizer use in Nilgiri district.

iii. To expose the problems faced by fertilizer traders in marketing the

chemical and bio-fertilizers.

iv. To assess the behavioural pattern of fertilizer users in Nilgiri district.

v. To make suitable suggestions for enhancing the volume of fertilizer

marketing in Nilgiri district.


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Methodology

Survey method has been used for this study. The required data have

been collected from primary and secondary sources. Primary data have been

collected by using two different interview schedules, one for the fertilizer

traders and another one for the fertilizer users. Apart from these sources,

secondary data from journals, books and reports have been used for having the

theoretical frame work. Data from websites have also been used in this study.

Secondary data for a period of ten years from 1998-1999 to 2007-2008

have been used for analysis. In some places, data for more than ten years have

been used which is purely based on the availability of data, for the analysis.

Sampling Design

Nilgiri district consists of five taluks namely Udhagamandalam,

Kundha, Coonoor, Kothagiri and Gudalur. Irrespective of the number of

dealers, ten dealers from each block namely 50 dealers have been selected. In

the case of selection of sample farmers, sixty each from five blocks namely 300

farmers have been selected randomly. In both cases, convenient random

sampling method has been followed.

Frame work of Analysis

For analyzing the secondary data, tools such as trend analysis, averages,

simple percentages have been used. For analyzing this primary data from

farmers and dealers, statistical tools such as correlation and chi-squire test are

employed.


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Limitations

The fertilizer users (farmers) have no proper written accounts. What

ever they said from memory has been taken as true. Even though the fertilizer

dealers have correct written accounts, they were not ready to disclose the

correct figures because of the fear of commercial tax and other problems

Another major limitation was the figures given by various agencies and the

agricultural authorities have no uniformity. Because of the above reasons, the

study is subject to the bias. More over, the study is pertaining to the farmers

who are holding the lands in the hill areas. So, the findings made from the

analysis may not be generalized to other plain areas of the state.


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Chapter II

DEMAND DETERMINANTS OF FERTIZER

Agriculture is the mainstay of the Indian economy, contributing about

22 percent of gross domestic product [GDP] and providing a livelihood to two-

thirds of the population. Food crops occupy 69 percent of the irrigated area, the

remaining 31 percent being under non-food crops. There are two main cropping

seasons, namely kharif [Apri-September] and rabi [October-March].

Supply and distribution of fertilizers were regulated under the Essential

Commodities Act (ECA). Manufactures were allocated a quantity of fertilizers

in different states according to the supply plan. All the fertilizers were

distributed by the manufactures according to their ECA allocation during the

two cropping seasons - Kharif and Rabi.

Credit plays an important role in fertilizer distribution and use;

generally, two types of credit are available in the fertilizer sector for fertilizer

distribution and use. One type is distribution credit, which a dealer used for

buying fertilizers from the manufacturer or wholesaler. The second type is

production credit, which a farmer uses for purchasing inputs, of which fertilizer

is the major one.

Promotion is an integral part of marketing. With the change in customer

profile, natural endowment and agricultural technology, the demand of

fertilizer promotion is also increasing.


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Chapter III

CONSUMPTION OF BIOFERTILIZERS IN

NILGIRI DISTRICTBiofertlizers are developed with the most advanced biotechnology

necessary to support developing organic agriculture, sustainable agriculture,

green agriculture and non-polluting agriculture. This bio-organic fertilizer can

increase the output and improve the quality of the soil. It is also responsible for

agricultural development.

The common advantages in using the biofertilizer are:

Protects excellent buffering capabilities

Provides the micro nutrients required for healthy growth

Improves yields and the quality of agricultural crops

Reduces the overall cost of fertilizers, based on yield

Reduces the number and type of pesticide sprays

It is a naturally balanced complete plant food

Behavioural Pattern of Biofertilizer Users In Nilgiri District

The consumption of biofertilizers depends upon the irrigation facility,

variety of crop cultivated and soil conditions. As most of the farmers are at the

primary and middle school level, they do not even know the name of the

biofertilizer manufacturing units, the type of product, the time of application

and quantity to be used. The state government and the manufacturing units are

propagating the advantages in using biofertilizers through wall writings and

personal contacts the awareness of using biofertilizers.


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Chapter IV

PROBLEMS OF FERTILIZER MARKETING IN NILGIRIDISTRICT

Nilgiri district with its vast agricultural potentialities for economic

growth requires an effective, viable and systematic distribution channel for

fertilizers to farmers living scattered all over the district.

Problems in Buying

The fertilizer dealers prefer to set up their sales outlets only in main

villages even through agricultural process is carried on in all areas. The farmers

also have to bear the transportation cost from the purchasing point to the area

of consumption.

The rate or quantum of rebate allowed by the fertilizer manufacturing

companies poses some problems to the small retailers. All the companies allow

quantity (Rs. 550 per ton) rebate if the purchase is made in large quantity. The

bulk purchasers (10 tonnes or above) can avail themselves of this opportunity

while the small retailers cannot get the benefit from the quantity rebate because

they make their purchase in small quantities.

The wholesalers are able to allow more price reduction than the retailers.

All the wholeseller are in block headquarters. So the farmers in Udhagai,

Kundha, Coonoor, Kotagiri and Gudalur and the surrounding villages alone

avail themselves of the benefit of price reduction. Others do not get such an

opportunity.


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Problem in Selling

The quality of the fertilizer deteriorates if they are stored for a long time.

As far as this district is concerned, the fertilizer requirement reaches its peak

for 8 months (February to September) remaining 4 months (October to

January) as the off season period. The unsold stock during the off season is

stored upto the beginning of the next season. As the fertilizers are stored for 4

months, the quality is not definitely going to be the same as when it was

packed.

Problems in Transportation

Almost all the fertilizer manufacturing companies are far away from the

consuming area. So it is essential to move the fertilizer from the manufacturer

to the ultimate consumer. Lorries and mini vans are used for transporting

fertilizers. There are possibilities for breakage, shortage and leakage during

loading and unloading of fertilizer bags and also during the transportation

because of the use of hooks.

Problems in Promotion

The SPIC established a Dealer Welfare Association. Which renders

services like scholarship to the children of the dealers who study professional

courses, compensation to the dealers for the unexpected loss of fertilizer stocks

and medical treatment to the children of the dealers. But in the Nilgiri district,

only a limited number of dealers are the members of this association. The


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association conducts seminars for the dealers once in a year. But nobody

represents Nilgiri district at the seminar during this study period.

Moreover all the companies appoint representatives to create awareness

and to spread the usefulness of chemical fertilizers among the farmers. Among

the various methods of advertisement, field demonstration is one of the most

effective promotional methods but no company has so far tried it in this district.

Such a field demonstration should be carefully planned and carried out in

farmers fields for their benefits. They must be announced well in advance so

as to catch the attention of the farmers in villages, where they are available in

large number.

Problems in Storage

Storing godowns is possibly only to some extent for retailers. But as far

as the wholesale fertilizer dealers are concerned, they are in a position to utilize

the private storage facility or rented godowns.

Another difficulty is the damage caused to the floor as well as to the

walls of the building. This reduces the life of the entire building. Therefore,

nobody comes forward to rent out buildings for storing fertilizers.

Problems in Finance

Finance is the life blood of any industry or agriculture, trade and

commerce. It is therefore essential for agricultural production. The strategy of

raising agricultural production through intensive cultivation of land, greater use

of water and high yield variety of seeds, fertilizers and pesticide requires large


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finance. The farmers can adopt this strategy only if they have adequate credit

support.

Credit is needed both by the fertilizer dealers and by the cultivators. The

fertilizer business is a seasonal business and the products are therefore to be

stocked by the intermediates during the intervening period between two

cultivating seasons. This requires large amount of capital. As the farmers

receive their income only after selling their commodities in the market and

have only limited resources, they require a large amount of credit at the

beginning of the cultivation.


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Chapter V

BEHAVIOURAL PATTERN OF FERTILIZER USERS IN

NILGIRI DISTRICT

The purchasing behaviour of farmers with regard to fertilizers is

influenced by the socio-economic factors like age, educational background,

experience in cultivation, size of land holding and also some other social

factors.

The farmers had a wide choice of selecting the fertilizers and the sample

respondents opined that most of the types of fertilizers are not available at all

times. However they had preferences of type of fertilizers available in the

market.

The application of fertilizer requires some knowledge. The consumption

of fertilizers depends upon the irrigation facilities, land utilization cropping

pattern, use of HYV seeds, and soil condition. Most of the farmers do not even

know the name of the fertilizers, manufacturing companies, the time of

application and the quantity of fertilizers to be used.


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Chapter -VI

DEMAND AND SUPPLY POSITION OF FERTILIZER

IN NILGIRI DISTRICT

Demand and supply position of fertilizers is influenced by factors such

as the spread of HYV, ground water irrigation, Infrastructure facilities,

Availability of suitable HYV and irrigation shift etc. The conversion of farmers

potential demand into effective demand depends on a variety of non-price

factors such as:

Effectiveness of agricultural extension services Credit for purchasing fertilizers Assured markets for output and Efficiency of fertilizer distribution networkFactors determining the demand and supply position of fertilizers

(i) Irrigation

Farmers in general are familiar only with traditional methods of

cultivation. When water is available, there is a change in the outlook of the

people involved in agriculture. Well irrigation refers to the supply of water

obtained either through the rain or from the ground water sources.

This district usually receives rain both during south west monsoon and

north east monsoon. The entire Gudalur and Pandalur Kundah Taluks and

portion of Udhagamandalam Taluk receive rain by the south west monsoon and


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some portion of Udhagamandalam taluk and the entire Coonoor and Kothagiri

taluks are benefited by the rains of north east monsoon.

Irrigation and rainfall position in Nilgiri district provides a vast scope

for fertilizer consumption because of the average normal rainfall of this district

Land use Pattern

The net area cultivated against the total geographical area is yet another

factor that also decides the demand and supply position of fertilizer

consumption. The total geographical area of this district is 2,54,485 hectares.

Against the total of 2,54,485 ha, the net cultivable area is 79,225 hectares.

Cropping Intensity

In almost all the taluks of Nilgiri district the cropping intensity is 100

per cent. This indicates that there is vast scope for fertilizer consumption in this

district

Cropping Calendar

In cropping calendar (February to September). The major crops grown

in this district are Tea, Coffee, Potato, Cabbage, Cauliflower, Carrot, Beans,

Pear, Ginger and Garlic.

Availability of Finance

Another factor that influences the demand for fertilizer is the availability

of finance at the right time. The farmers in Nilgiri district get the finance from

commercial banks, the private banks, co-operative banks as well as the private

money lenders.


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The private money lenders are not in a position to offer long term credit.

They give only short term loans at higher rates of interest. Hence the farmers

experience difficulties in meeting the total cost of cultivation including the cost

of fertilizers. If the farmers have enough financial resources to meet their

expenses, the demand for fertilizers is bound to increase.


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Chapter - VII

FINDINGS, SUGGESTOINS AND CONCLUSION

Findings

This study has mainly focused the problems in marketing of fertilizer in

this study area. Based on the analysis the following findings are made:

1. Bio Fertilizer is most advantages to support developing agriculture,

sustainable agriculture, green agriculture and non-polluting agriculture.

This bio-organic fertilizer can increase output, improve the quality of

the soil. The farmers in the study area have not used the Bio-fertilizer

in recommended dosages and there is a wide gap between the

recommended and actual consumption. It is not the common practice of

applying bio-fertilizer for other major crops in the study area like

cabbage, potato, carrot and in plantation crops.

2. The bio-fertilizer have universal application. It can be used for any

type of crop and any type of land. But chemical fertilizer have no

universal application it is used on the basis of the NPK content in the

soil. The NPK content of soil is assessed by soil testing.

3. The fertilizer wholesale dealers obtain their requirements either

from fertilizer manufacturing company or from direct agents. No

manufacturing company is near by Nilgiri district. All of them are

located 400 to 500 km away from this study area. So there is no

possibility for direct purchase of fertilizer from the manufacturing

company. The only possibility for acquiring their requirement is to take


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delivery from the direct agents from the authorised godown of the

manufacturing companies.

4. The fertilizer manufacturing companies allows Rs.50 per tonne as

quantity rebate for those who make the purchase of 10 tonnes and

above. This is possible only for the wholesalers and not for the retailers.

5. In this district it is common that the fertilizers dealers (wholesellers

and retailers) prefer to setup their outlets only in the main villages even

though the fertilizer is required ever in the remote villages. Because of

this reason the consumers are in a position to bear the additional cost of

transportation.

6. In general the wholesellers are able to allow more price reduction

than the retailers because of their direct dealing and the advantages

obtained from the manufacturing company. So the farmers in Udhagai,

Kundha, Coonoor, Kothagiri, Gudalur and Pandalur and the surrounding

villages alone avail themselves of the price reduction. Others do not

have such an opportunity.

7. For selling the fertilizer of each manufacturing company it is

necessary to get Principal Certificate besides the license obtained

from the government. In order to get the above principal certificate the

wholesellers have to pay a lump sum amounts as deposit. The security

deposit amount is Rs. 1,00,000 for a wholesellers besides Rs. 5,000 as

dealer deposit to each one who is doing the business in wholesale or

retail. The fertilizer manufacturing company has to repay the deposit


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amount if the wholesellers close the business by cancelling their

principal certificate. But no interest is paid by the company to the

dealers for the amount of deposit (dealers deposit) and 11% interest is

paid to the security deposit deposited by the wholesalers.

8. As far as this district is concerned the fertilizer consumption has

reached its peak for a period of eight months from February to

September and remaining four months from October to January is the

off season period. The unsold stock during the off season is stored upto

the beginning of the next season. The quality of the fertilizer

deteriorates if they are stored for a long period.

9. The common mode of transport used for transporting fertilizer is

lorry and minivans. There is possibilities for breakage, shortage and

leakage during loading and unloading of fertilizer bags and also during

the transportation because of the use of hooks. The fertilizer

manufacturing companies or the godown authorities are not responsible

for the shortage, breakage and leakage of fertilizers.

10.Spic has established a Dealer Welfare Association. The subscription

for the above association is Rs. 10.00 per dealer/ ton. The same amount

is equally paid by the company also. This association renders services

like scholarship to the children of the dealers who study professional

courses, compensation to the dealers for the unexpected loss of fertilizer

stocks, medical treatment to the children of the dealers, But in Nilgiri

district only a limited number of dealers have enrolled themselves as


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members in the association. They are not ready to pay Rs.10 per ton as

subscription. The association conducts seminars for the dealers once in

a year. But nobody represents Nigiri district at the seminar during this

study period.

11. It is observed that in Nilgiri district only a few number of

wholesellers do some promotional activities in association with the

fertilizer manufacturing companies.

12. Field demonstration is yet another method of sales promotional

activities carried out by the fertilizer manufacturing companies. This is

done only in the selected fields in the selected villages and this has no

wide coverage.

13.As the fertilizer is a seasonally required product it is necessary to be

stored from the beginning to the end of cultivation period. If the

fertilizer is stored for long time, the quality becomes deteriorated and

damage the floor as well as the walls of the building in which it is

stored. Also storing for a long period results in solidification of fertilizer

and that leads to difficulty in application.

14.Credit is needed for both the fertilizer dealers and the cultivators.

Fertilizer business being a seasonal business, it requires huge amount of

capital at the beginning of cultivation season for purchasing and storing

fertrilizers. But both the farmers and the dealers get the returns only

offer the cultivation period. This causes heavy financial strain to both

dealers and the farmers.


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15.The private money lenders and private banks are the main sources of

finance to the farmers. The private money lenders offer loan only for a

short period. The amount of loan offered by the private bank is not

enough to meet the basic requirements of purchasing fertilizers, seeds

and other agricultural inputs.

16.Among the 300 sample respondents selected majority of the

respondents in Nilgiri district are having qualification of 8th standard.

Only the meager percentage (7%) possesses the qualification of degree

and above.

17.As far as Nilgiri district is concerned about 60 percent of farmers are

not adopting the recommended dosage of fertilizers. But some of them

are aware of the recommended quantity but not adopting because of

inadequate finance.

18.The area under cultivation in Nilgiri district are 79225.64 hectares

against the total of 2,54,485 hectares. The net area cultivated against the

total geographical area in Nilgiri district is around 31 percent.

19.The percentage of cropping intensity shows that almost in all six

taluks of Nilgiri district are having 100 percent cropping intensity.


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SUGGESTION

1) The Agricultural department, environmental organisations and social

organisations should make an awareness among the farmers by

highlighting the advantages in using bio-fertilizer by adopting effective

promotional strategy. At the same time, it should be insisted that the

private chemical fertilizer dealers should purchase and sell certain

percentage of bio-fertilizer against the purchase of chemical fertilizer

and there by make a possibility for increasing the turnover of bio

fertilisers.

2) The farmers in Nilgiri district have no common practice of testing soil.

To assess the nutrient content of the soil, the Fertilizers and Chemical

Trivangoore Ltd (FACT) has its own labratory facilities for testing soil,

in many places of Tamilnadu including the Nilgiri district. The

government agriculture officials of Nilgiri district have the

responsibility to make awareness among the farmers for testing soil so

as to use right type of fertilizer at right time for the right land.

3) If the fertilizer manufacturing company limits the area of operation to a

sales officer to one or two blocks the difficulty of getting delivery order

may be rectified. The language barrier in getting delivery ordered may

be rectified if local people are appointed as sales officers.

4) Many number of wholesaler and retailers in Nilgiri district opined that

Rs.1,00,000 as security deposit besides Rs.5000 as dealer deposit for

getting principal certificates leads to unnecessary blockage of capital


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and financial strain to the dealers. If the manufacturing company comes

forward to reduce the above deposit that will free the dealers from the

financial strain and welcomes many of them to enter into this business.

5) Financial institutions should come forward to reduce the interest rate for

loan given to the dealers of fertilizers. The loss which arises due to the

stock of slow moving items may be lessened by the non-insistence to

produce them. Moreover, if the fertilizers are sold on credit, the

repayment made by the customers takes 3 to 4 months. So the loss due

to locking of this money can be reduced by the commercial bank by

granting loan to the dealers at a lower rate of interest.

6) For loss by leakage, breakage by the hooks used by loading men, it will

be mainly by the instruction by the company or godown authorities

concerned. For avoiding the delay in delivery, the godown authorities

may allow the dealers who take the delivery by allowing them to use

their own men for loading and unloading

7) Except SPIC no other fertilizer manufacturing companies has

established dealer welfare association. If they do, that will help the

farmers to avail facilities like scholarship to the children of the dealers

who study professional courses, medical treatment etc. And if the

dealers meet is conducted in the block level instead of district level,

more dealers may attend and offering any complaint will also encourage

the dealers to attend the meet.


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8) Instead of concentrating on wall writing and sign board if the fertilizer

companies produce and play the advertisement film with some

entertainment aspect, that will reach a large number of farmers.

9) The quantum of loan offered by the private money lenders and private

banks is less. This problem can be solved by involvement of

commercial banks to offer long-term loan. If the commercial banks

offer credit to this priority sectors more than 50 percent against the loan

already offered, this problem may be reduced to some extent.

10) The government and the agriculture department should take efforts to

inform the advantages in using the right type of fertilizer at right time in

the recommended quantity. In addition, both the government and

agriculture department should have the responsibility to assure the

continuous supply of required type of fertilizer in the required quantity

in the required time

Conclusion

The future of Indian formers lies on the development of agriculture.

The farmers are facing lot of difficulties amidst the existence of failure of

monsoon. The natural calamities that severely affect the formers can not be

avoided. So, the farmers should be given all sorts of amenities to survive. In

this connection, all the authorities who are either directly or indirectly involved

in the development of agriculture should extent their helping hands by way of

providing all types of facilities particularly the availability of fertilizers

without any interruption, and easy availability of loan. This will help the

farmers atleast to survive in the future.

Chapter NJD -4 Original File

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