The industry strategy on fertilizer subsidy remains similar to the classic Tabaco Industry response to Cancer claims since 1954. Robert Proctor, a historian at Stanford coined a term for it ‘agnotology’, when ignorance is deliberately produced and indisputable facts do not win arguments. Proponents of “Direct Benefit Transfer of Fertilizer Subsidy” pilot claim it generates point of sale farmer traceability to stops leakages and timely payments to the industry; which is good however not the complete illustration. To pick these low hanging fruit, one needn’t cut down the tree itself. But, that is exactly what’s planned.
The truth about DBT is about transferring benefits to the industry. The fertilizer subsidy DBT pilot project in 17 districts is well planned deception like the Trojan horse. It is misleading as it doesn’t incorporate all the draconian measures that will eventually be a part of the full roll out. Ultimately the final form of DBT will allow the industry to price fertilizers at will and the burden for collecting subsidy from the government will be transferred to the farmers. It’s all similar to US sugar industry in 1960 successfully paying scientists & academics to delink sugar and heart disease by diverting attention to saturated fat. Realizing the enormous opportunity, for the 1st time the largest international fertilizer companies like Yara International have started to buy Indian urea fertilizer plants to get a toehold into the lucrative market.
The fertilizer price has two components; the retail price which is fixed and the subsidy component which is variable. Today, irrespective of how the international urea price fluctuates, the farmers get to buy the urea bag at a fixed cost of Rs.284. With the new regime of DBT all that will be reversed on its head; the price of a urea bag will become variable while the subsidy component will be constant. In 2008 the international urea price breached US $ 500 per tonne mark and in India the urea retail price was Rs. 239 per bag. International prices are about half today but are perking up. Should the international price rise to 2008 levels in the DBT regime; the farmer could have to shell out Rs.1200 per bag.
A perfect analogy to explain the final version of DBT of fertilizer subsidy regime is the LPG gas cylinder cost borne by the consumers. Before the DBT on LPG, consumers paid Rs.450 for the gas cylinder. After the regime change, gas cylinder price has risen to Rs.805. First the consumer purchases the cylinder at full cost and is later reimbursed the subsidy component if applicable. Similarly at present, farmers just pay the subsidized retail price and take home the bag of urea. However in the new regime, the farmer will have to register with land documents (difficult to procure) and pay upfront the full price. Later the subsidized amount will be reimbursed to the farmer. It simply means that the capital expenditure & credit requirement for the farmer will increase by a third, for no fault of his. Most common cause of farmer suicides remains credit.
Just as Tim Harford explained ‘distort, dispute, distract’ in ‘The problem with facts”; first the fertilizer industry appeared to engage, next it sowed doubt on prioritizing farmer needs over fertilizer industry profitability and in third stage employing their enormous pool of resources they are using amenable experts to undermine farmers concerns & real expertise.
The new regime will also limit the quantity of subsidized fertilizer a farmer will be allowed to purchase. Wheat, Rice, Potatoes, Pulses or Millets etc. each require different nutrients in varying quantities depending of soil and crop selection. The policy negates the fact and goes back to old bureaucratic generalization of Indian agriculture which has failed the nation repeatedly. Today, 10 crore tenant farmers can buy subsidized fertilizers but in the new regime will not be entitled to subsidized fertilizers because land records don’t reflect their names.
DBT of fertilizer subsidy can be good if tweaked to protect farmer support. Farmer with their back to wall, pray for parliamentary guarantee safeguards because mere words aren’t legally binding. Framers are hurt and feeling betrayed, because issue of livelihood are not the primary concern of farmer fertilizer cooperatives anymore. The last bulwarks of farmer hope and resistance against the international fertiliser mafia have fallen.
Government’s grand vision for a ‘New India’ is at variance with its narrow economic policies. Officials only hope to rein fertilizer subsidy expenditure. The number of economists advising the government has reached an affliction point and sadly ‘Doubling Farmer Income’ is becoming a parody against the establishment. Disengaged farmer voices are being drowned in the din generated by the fertilizer industry and the small are in danger of remaining trapped by their circumstances. Is anybody listening??