Dec 27, 2013 by sgustafson
Fertilizer use in India has exploded since the government
began a subsidization program in the 1970s. National fertilizer consumption
rates increased by 50% during the 1990s. But research has shown that the
effectiveness of these inputs has actually declined – on average, 8 kilograms of
grain were produced per kilogram of fertilizer in the late 1990s, compared to
25 kg of grain per kg of fertilizer in the 1960s. Many farmers have reacted by
simply applying even more fertilizer to their land; in addition to greatly
increasing the cost of the government’s subsidy program, this overapplication
of chemical fertilizers can cause long-term damage to the soil and surrounding
water supply, further threatening agricultural productivity. And while some
farmers are using far too much fertilizer, other smaller farmers continue to
have little or no access to fertilizers at all, thereby underscoring deeper
systematic problems with fertilizer subsidies and distribution within the
country.
In an effort to break this cycle of costly and damaging
overuse, and to increase access to proper amounts of fertilizer by marginalized
farmers, the Indian government has proposed phasing out the subsidy program in
favor of direct cash transfers (DCTs) to both farmers and retailers. The hope
is that DCTs will provide incentives for farmers to use fertilizers more
efficiently and also lower the cost to the government. In a new
article published in Economic and Political Weekly, IFPRI Postdoctoral
Fellow Avinash
Kishore, IFPRI research fellow Devesh Roy, and K.V.
Praveen of the Indian Agricultural Research Institute argue that such a
proposal faces some daunting challenges.
The first question is how to determine who will receive the
cash. Unlike other cash transfer schemes that target specific populations (such
as girl children or pregnant women), there are no clear criteria for
identifying farmers. Identification cards can’t guarantee that the cardholder
is truly a farmer, and land records are often unreliable and exclude tenant
farmers. The government has proposed creating a database that would be used to
identify beneficiaries based on the size of their farms and what they produce;
as both farm size and plantings can vary greatly as time passes, however, this
too is far from a perfect solution. Furthermore, safeguards would need to be
put in place so that the DCTs would not encourage the production of certain
crops to the detriment of others, or discourage investment in less
fertilizer-intense technologies, such as organic farming.
It also will be a challenge to prevent cash transfers from
distorting market prices and ultimately harming farmers, according to Roy.
Fertilizer prices are by nature highly variable, and so the scheme needs to
protect farmers’ purchasing power in the face of these changing prices. Tracking
prices effectively for various types of fertilizers, however, will be
time-consuming and expensive. Additionally, the government needs a way to
effectively monitor and ensure that retailers and wholesalers don’t collude to
raise market prices.
Finally, it’s important that any new fertilizer subsidy
scheme has mechanisms in place to ensure the proper use of fertilizers and
prevent further environmental degradation stemming from their overuse. Such
mechanisms could include regulating how much fertilizer can be purchased by any
one farmer and providing incentives to encourage the use of a proper mixture of
fertilizers that will help maintain optimal soil nutrients.
Read the full
article
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