Cash Transfers + Fertiliser Subsidy + Impatience = ???

And this is the second story in the fertiliser package that the Economic Times published.

The ministry of fertilisers is planning to migrate to cash transfers in three phases. In the first phase, to be completed by December, it will extend its fertiliser management software beyond the 30,000 fertiliser warehouses to 230,000 licenced retailers. In the second phase, scheduled to begin from the next kharif season (June 2012), the nutrientbased subsidy will be re-routed from companies to retailers. The third phase, cash transfers to farmers, will be rolled out once farmers are allotted unique identification (UID) numbers. Each phase is posing large questions, especially related to time.

Really, listening to the mandarins, I found the timelines scarcely believable. More here.

Changes In India’s Fertiliser Policy. Circa 2010

Every year, Lakshminarayan Sharma, a sharecropper in a village about 30 kilometres off the ancient town of Vidisha, Madhya Pradesh, rents 10 bighas of land from a bigger farmer and plants soya and wheat. For several years now, he has been seeing a worrying trend. The soil is weakening. Traditional crops, he says, do not grow in this soil any longer. Further, yields from the newer varieties of soya and wheat fall if fertiliser use is not continually increased. Take GW, he says. In 2005, when he first used this high-yielding variety of wheat, “It delivered good yields if half a sack of fertiliser was used for every sack of seeds. Three years later, it needed a sack of fertiliser for every sack of seeds. Otherwise, output would fall by half.”

Travel across India and this is a narrative you will encounter often — soils are weakening, yields are falling, all despite a robust increase in fertiliser application.

This trend of diminishing returns to fertiliser use is one reason why the bureaucrats in the fertiliser ministry are overhauling (and i do not mean that as a journalistic cliche) the country’s fertiliser policy. in this story, i reach some preliminary conclusions on what the new policy means for farmers, companies and the government itself — will there be greater diversity of fertiliers? what about prices? will the new approach help in better outcomes for the environment? etc etc etc etc etc…

take a look.