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 costeffective 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 yearon-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 Yielding Hybrid Seeds Growth of Irrigation Access to agro processing & storage facilities Improved road networks Move towards horticulture Reduction in pesticide use Government Policy Initiatives Change in eating habits Growing Awareness

SUSTAINABLE AGRICULTURE THROUGH BALANCED FERILIZATION

Intensive agriculture Reduced dependence on unpredictable monsoons Access to wider domestic and international markets IMPROVE THE ECONOMICS OF FARMING Focus on building disease resistance Improving farm gate support prices; extension efforts; “incentivizing” agriculture

GROWING NEED FOR SPECIALTY FERTILIZERS

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