Will Bringing Urea under NBS Make the Difference?
Guy Goves, President, Agri Business and Farm Solutions, DFPCL

Guy Goves, President, Agri Business and Farm Solutions, DFPCL, believes that the NBS has been good for the country, but not bringing urea into the NBS is one negative move which has impacted balanced fertiliser application. He says, countries like Bangladesh and Pakistan which have lower subsidies use higher fertiliser doses and have higher productivity.

Please share some insights into the future-scenario if the government decides to double the gas price? What should be an ideal mechanism to calculate and fix the gas prices?
If this happens then for urea companies the subsidy would go up to the extent of the increase or the government may want to increase the price of urea to offset the increased subsidy burden - in all likelihood it would be the latter.

It is quite possible that there would be surplus gas because in the power sector there would be fewer takers as the price increase is unaffordable.
So, some of hte options can be, first, Fixing the price on a weighted average price for gas rather than simple average; second, working out the gas price on purchasing power parity with other nations; and third, excluding gas prices from the calculation as per the first point of those nations where gas is used for high end industrial uses like Japan.

What are the elements affecting ‘balance application of fertiliser’ ?
The glut in 2012-13 and the drought situation greatly impacted the fertiliser industry's working capital as companies had to offer longer credit periods as well hold inventory for a longer period, and delay in subsidies further stretched the cash flows of these companies. Further, keeping urea out of the Nutrient-based Subsidy (NBS) has had an adverse impact on balanced application of fertiliser. Analysis has shown that wherever complex plants are situated the fertiliser application is more balanced. Urea should be brought under NBS.

Low budgetary allocation to the sector leads to further delays in subsidies as more often than not subsidies run out half way through the year. All these factors ensure that this sector is not attractive to investments, yet the industry is one of the main drivers of food security which should be very high on the agenda of the government.

As a fertiliser company, how do you maintain the profit margins and operating cost through balancing the subsidies offered to the fertilizer sector for gas and those to the farmers?
We focus on operating cost and efficiencies as we have to compete in a competitive market environment where market prices are concerned. Brand building and farmer connect give our products better salience in the market. Our Agri business and farm solution drive our 'farmer connect' to make our products the 'choice' of the farming community.

What is the role of technology to strengthen the sector?
The way I see it, technology would play a great part if we are to create competitive and sustainable agri ecology. Optimisation of land for better productivity, new seed varieties, sustainable water management, new and safer molecules in terms of crop care, mechanisation and improving the disorganised supply chain, should be some of the key drivers for agri growth . Most importantly, as the domestic markets are emerging, triggering a huge import requirement for products like apples and pears, our farmers should be enabled to access international markets through better know how and GAP certification so that they could be globally competitive domestically as well.

What are your expectations from the government?
The government should move away from controlling the industry from the subsidy angle and instead give subsidies directly to farmers. Allow the fertiliser Industry to be more market oriented and competitive. As a country we are dependent to the extent of 60 per cent on imports of nitrogen, 93 percent on imports of phosphates and 100 per cent on potash to fulfil our needs; in this context the country should set up a joint investment fund to invest in projects abroad to ensure raw material security for the country .

The government should focus on sustainable agriculture in terms of water management and help set up structures to ensure that a competitive and productive environment is provided for the farming community. The single point agenda should be to make the Industry more market driven, give subsidies directly to the farmer and ensure that companies have a more market driven environment where competitive advantage is created through differentiation and economic cost structures.

Reviving sick units should not be on the agenda, ensuring raw material security for gas, ammonia, phos acid should be high on the governments agenda along with improvement in farm productivity.