Marketing of Agricultural inputs

Marketing of Agri inputs

Classification of Agri inputs
– Consumable inputs: seeds, fertilizers, manure,
pesticides, animal feeds, veterinary products,
energy (petrol, diesel, oil), materials such as
ropes, baskets, gunnies etc
– Durable inputs: farm machinery, irrigation
equipments, construction materials (cement,
bricks), transportation equipments (tractors,
trailers, tempos, carts) etc
 Marketing of Agri inputs
• Fertilizer – important input to increase crop yield
Fertilizer Food Grain
Consumption production
(Million (Million
Year Tonnes) Tonnes)
1971-72 2.66 105
1999-00 18.07 212
2025 (Esti.) 40-45 300

• The govt. initiatives favorable pricing schemes,

encouraging distribution, establishing quality control
laboratories.
• Production, distribution, consumption of fertilizer
creates additional employment opportunities
 Marketing of Agri inputs
• Fertilizer Market in India
Users (75%) Non-users (25%)
Large & Medium farmers Small farmers
UP (Sugarcane, Paddy), AP, Bihar, Orissa &
Maharashtra, Punjab & WB Rajasthan
Rabi season (54%) & Khariff season (46%)
The market is Rs. 30, 000 Crores / Annum
64 large &80 medium &small scale plants – NPK fertilizers &
mixtures
dependent on import of finished fertilizers & raw materials
Major NPK producers in world – China, USA &India
 Marketing of Agri inputs
Leading fertilizer manufacturing Co in India
• SPIC (Southern Petrochemical industries corporation)
• FACT (Fertilizers and chemicals travancore Ltd)
• IFFCO (Indian farmers fertilizer co-operative)
• GSFC (Gujarat state fertilizer company)
• KRIBHCO (krishak bharthi co-operative Ltd)
• Chambal Fertilizer & Chemicals Ltd
• Rastriya Chemicals & Fertilizers Ltd
• Coromondal Fertilizers Ltd
• Nagarjuna Fertilizers
 Marketing of Agri inputs
Product
• 16 food elements are necessary for a plants growth
Classification of plant nutrients

Primary Secondary Micro

C,H,O,N,P &K Ca, Mg, S Fe,Mn,Cu,Zn,B,Mo &Cl
C – Carbon; H – Hydrogen; o – oxygen; N – Nitrogen;
P –Phosphorous; K – Pottasium;
Ca – Calcium; Mg – Magnesium; S – Sulphur;
Fe – Iron; Mn – Manganese; Cu – Copper; Zn – Zinc; B – Boron;
Mo – Molybdenum & Cl - Chlorine
 Marketing of Agri inputs
Classification of fertilizers

Nitrogenous: Compund: Mixed:

Ammonium Phosphatic: Pottassic: Diammonium NPK:
Sulphate (20.6% Super Phosphate Muriate of Phosphate 12:32:06,
of N), Urea (46% (16% of P), Rock Potash (60% of (DAP-NPK- 10:26:26,
of N), Calcium Phosphate (20% K); Sulphate of 18:46:0) 15:15:15
Ammonium to 30% of P) potash (50% of P)
Nitrate (27% of N)
 Marketing of Agri inputs
• The application of fertilizer: in soil or broadcast over
the field (Paddy crop)
• The quantity of fertilizer – fertility of soil, type of crop
& irrigation facility
• Marketing of fertilizer – generic name (As per fertilizer
control order & essential commodities act)
– Jai kissan Urea (Zuari fertilizer)
– Vijai Urea (Madras Fertilizer)
– Nagarjuna Urea (Nagarjuna Fertilizer)
– Packing – HDPE (High Density Polyethilene) bags of 50 kg.
Logo for easy identification by farmers (elephant brand for
FACT fertilizer)
 Marketing of Agri inputs

Fertilizer capacity utilization in India (1995-96)

Production ('000 tonnes)/Capacity ('000 tonnes)
Particulars Public Private Co-operative Total

3025/4134 3940/3666 1804/1532 8769/9332

N (73.2%) (107.5%) (117.8%) (94%)

689/791 1543/1848 361/309 2953/2948

P (87.1%) (83.5%) (116.8%) (100%)

3714/4925 5483/5514 2165/1841 11362/12280

Total (N+P) (75.4%) (99.4%) (117.6%) (92.5%)
 Marketing of Agri inputs
Production, Imports & Consumption of diff fertilizers in India (Lakh Tonnes)

Demand
&Supply
Production Imports Consumption Gap
Year N P K Total N P K Total N P K Total

1951-52 0.11 0.16 0 0.27 0.29 0 0.08 0.37 0.14 0.08 0.22

1961-62 1.52 0.72 0 2.24 1.42 0 0.32 1.74 2.43 0.66 0.29 3.38

1970-71 8.3 2.29 0 10.59 4.77 0.32 1.2 6.29 14.87 4.62 2.28 21.77 11.18

1980-81 21.64 8.41 0 30.05 15.1 4.52 7.97 27.59 36.78 12.14 6.24 55.16 25.11

1990-91 69.93 20.52 0 90.45 4.12 10.2 13.26 27.58 79.97 32.21 13.28 125.46 35.01

2001-02 107.68 38.6 0 146.28 2.69 4.39 17.01 23.99 113.1 43.82 16.67 173.6 27.32
Marketing of Agri inputs
Consumption per Hectare of Gross Cropped
Area (Kg)
Year N P K Total

1951-52 0.44 0.05 0.06 0.55

1961-62 1.39 0.35 0.19 1.93

1970-71 8.92 3.26 1.43 13.61

1980-81 21.31 7.03 3.61 31.95

1990-91 43.02 17.33 7.14 67.44

2001-02 58.72 22.75 8.66 90.12

2001-02 NPK ratio -
6.8:2.6:1
 Marketing of Agri inputs
Consumption of fertilizers per Hectare of cropped Area (Kgs) - 2001-02
S.No Staes/UT N P K Total
1 Punjab 132 38 4 174
2 Haryana 117 37 2 156
3 AP 87 40 17 144
4 Tamil Nadu 76 31 34 141
5 UP + Uttranchal 97 29 4 130
6 West Bengal 63 36 28 127
7 Manipur 87 12 6 105
8 Karnataka 54 29 18 101
9 Bihar 67 15 5 87
10 Gujarat 57 22 6 85
11 Maharashtra 45 21 11 77
12 Jammu &Kashmir 47 16 1 64
13 Kerala 26 13 22 61
14 Himachal Pradesh 28 7 6 41
15 Orissa 26 9 6 41
16 MP + Chattisgarh 23 15 2 40
17 Assam 19 11 9 39
18 Rajasthan 27 9 0 36
19 Tiripurra 17 9 5 31
20 Meghalaya 11 6 1 18
21 Mizoram 5 5 4 14
22 Sikkim 5 3 1 9
23 Arunachal Pradesh 2 1 0 3
24 Nagaland 1 1 0 2
 Marketing of Agri inputs
Price
• GOI – regulating fertilizer price – kept low level
price – increased usage &productivity
• Govt. policy prescribes allocation of quantity to
different zones in the country – uniform selling
price – distribution margin, freight charges also
• Fertilizer industry co-ordination committee (FICC)
– retention price & administration – diff. fertilizer
units
 Marketing of Agri inputs
• Subsidy = retention price – actual selling price
in 1980-81: Rs.505 Crores; in 2004-05: 16,000
Crores
• Govt. decontrolled fertilizers price except Urea
– ad hoc subsidy scheme
• Retail prices of fertilizers – 2003-04:
Fertilizer Price/tonne (Rs)
Urea 4830
Diammonium Sulphate (DAP) 9350
Muriate of Potash (MOP) 4455
Complex fertilizer 6980 - 9080
 Marketing of Agri inputs
• To make the fertilizer available to farmer lesser
than the economic cost
• Nov 1977 (indigenous fertilizer Subsidy
introduced) uniform price for specific grade
• RPS (Aug 1991) – Purpose – maximum utilization
of plant capacity &encouraging new
entrepreneurs
• Fertilizer based subsidy (from time to time) –
purpose – corrective action for imbalance use of
fertilizers (in 2001-02 Year NPK ratio 6.8:2.6:1)
 Marketing of Agri inputs
Prices of some fertilizer in India (Up to July 1991) (Rs. per Tonne)
11-7-81 to 29-6-83 to W.e.f August
S.No Fertilizer 28-6-83 30-1-86 30-1-86 to July 1991 1991 (RPS)*
1 Urea (46% N) 2350 2150 2350 30% Increase
DI-Ammonium Phosphate
2 (18:46:0) 3600 3350 3600 "
3 Muriate of Potash (60% K) 1300 1200 1300 "
4 Sulphate of Potash (50% K) 2100 1950 2100 "
5 Mixed Fertilizer (15:15:15) 2100 1950 2100 "
6 Mixed Fertilizer (10:26:26) 2950 2750 2950 "
7 Mixed Fertilizer (12:32:16) 3250 3000 3250 "
*Retention
Price
Scheme
 Marketing of Agri inputs
Prices of fertilizers in India since 1991
Year Urea DAP MOP
Controlled prices
25-Jul-91 3300 5040 1820
14-Aug-91 3060 4680 1700
25-Aug-92 2760 Decontrolled Decontrolled
10-Jun-94 3320 Decontrolled Decontrolled
Prices paid by farmer
1994-95 (K) 3320 7500 3800
1996-97 (K) 3320 11000 4800
1996-97 (R) 3320 9000* 4300*
(*Enhanced
price
concession)
Marketing of Agri inputs
Subsidy on Fertilizer in India (Rs.in Crores)
Indigenous Imported Decontrolled
Year Fertilizer Fertilizer Fertilizer Total
1971-72 0 -20 0 -20
1976-77 60 52 0 112
1980-81 170 335 0 505
1985-86 1600 324 0 1924
1990-91 3730 659 0 4389
1995-96 4300 1935 0 6235
1996-97 4753 1163 1672 7578
2001-01 9480 1 4319 13800
2002-03 6499 505 4224 11288
 Marketing of Agri inputs
Distribution
• Fertilizer consumption is highly seasonal –
important to made it available at mandi retailer
• Private dealer channel:
Factory Ware house retailer farmers
Factory Wholesaler retailer farmers
• Co-operative society channel:
• Factory Dist. Wholesale society Taluk level
society Village level society farmers
 Marketing of Agri inputs
• The commission earned by wholesaler/retailer is
1-3 % of selling price. Only order against demand
- Stocks (short notice demand) – higher price
(supply < Demand) – credit increase the sales
• The no.of retailers:
In 1970-71: 82,000 In 1997-98: 2,60,000
• Each retailer deals with many fertilizer companies
based on range of products, service, brand
popularity and demand.
 Marketing of Agri inputs
• Initial Demand creation for fertilizer – Method: how to
use & subsidy – Purpose is increase in Agri productivity
not profit
• Up to the end of 1st five year plan (1951-56), fertilizer
marketed by Co-operative society and State
Agricultural Departments
• During 2nd five year plan (1956-61), fertilizer marketed
by Co-operative society and village panchayats
• Later, Govt allowed fertilizer production units (Licensed
before Dec 31, 1967), to sell it through own agencies
and others (allotted ratio 70:30 respectively)
Marketing of Agri inputs
Number of Fertilizer Sale Points (Outlets) in India
Co-operatives &
institutional
Year Agencies Private Total
1970 33418 (47%) 38234 (53%) 71652
1980 51560 (44%) 64682 (56%) 116422
1990 80040 (35%) 151130 (65%) 231170
2000 73933 (26%) 205360 (74%) 279293
2002 71434 (25%) 211342 (75%) 282776
 Marketing of Agri inputs
Promotion
• The farmer is target customer – factor affecting
fertilizer promotion
– Education
– Income
– Size of the farm
– Types of crops grown
– Output price
– Yield & past experience
– Media & methods used
 Marketing of Agri inputs
Formal media
Printed materials (leaflets, posters in regional languages)
Regional TV and radio
Regional newspapers
Wall paintings &bus boards
Rural specific media
Farm-to-farm visit
Opinion leaders
Group meetings of farmers
Field demonstration
Field day
Village level film shows
Screening of films in rural cinema halls
Farmers training program
Village adoption
Soil testing
 Marketing of Agri inputs
The Essentials
Commodities Act,
1955
•Objective: Production,
Supply &Distribution of
certain commodities
•Fertilize declares as
essential commodities
The Fertilizer (Control) order, 1957
U/S 3 of ESA 1955
Objective: To regulate manufacture, sale, distribution,
price and quality of fertilizers
Sales &distribution: License form competent Sate
Authority
Price: Selling price > Govt fixed price is punishable
Quality: Sold Fertilizer standard < Govt fixed
standard is punishable
(Clause 19 : Appointment of inspectors of fertilizer)
Any contraventions leads to imprisonment of 6
months to 7 years with fine directed by special courts

The fertilizer (Movement Control) Order, 1973

•Objective: To ensure equitable distribution of fertilizer in the states of
India
•Export from one state to another is not allowed with out valid authority
issued by GOI, Director of Agri of a State Govt, Ministry of Agri or any
other officer appointed by State Govt
• Fertilizer Inspectors can enter, search and seize
 Marketing of Agri inputs

• Basic Purpose of Tractors

Farming Transportations Power Source

Operations People, Fodder, Food Harvesting, Pumping of
Seedbed grains water
Preperations
 Marketing of Agri inputs
• Tractor introduced in Indian market in early twenties.
• Tractor manufacturing commenced in 1960.
• Tractors were imported from Czechoslovakia, UK, USSR, West
Germany, Rumania, Bulgaria, Yugoslavia & German
• Non-availability of spares & service on imported Tractors – Govt.
banned import of tractors in 1973 (Except Tractors purchased
through World bank assistance scheme)
• Govt. issued Tractors price control order in 1967 – Adhoc pricing
policy based on recommendations of Bureau of Industrial Costs and
Prices
• In Oct 1974, Govt introduced parametric surveillance – guidelines
to fix price and any increase should fall under the parameters laid
down – withdrawn in 1976 (Except MF 1035: 35 HP, TAFE 504: 50
HP from TAFE Ltd Ford 3000: 46 HP from Escorts Ltd)
Production, Imports and Sale of Tractors in India
(Numbers)
Year Production Imports Total Sale
1961-62 880 2997 3877 NA
1970-71 20104 13300 33404 NA
1980-81 70007 Nil 70007 65101
1990-91 139233 139233 139831
00-01 NA Nil NA 254825
 Marketing of Agri inputs

• Market Segmentation is based on the Horse

Power (HP) of the engine.
Horse Power Based Market Share
(2004-05)
Estimated Sale of Tractors (2004-05)
% of
No.of
Horse Market
Region State tractors sold
Power Share Examples
UP 59200
< 30 HP 25% North India
Punjab 31000
31-40 HP 55% (65%)
Haryana 21900
41-50 HP 15% Sarpanch 45 HP
MP 32700
>50 HP 5% Arjun 60 HP
Western Rajasthan 24000
India (28%) Gujarat 22200
Maharashtra 16000
South India AP 9800
(7%) TN 7400
Total 2,24,200
 Marketing of Agri inputs
• More than 12 companies engaged in Tractor manufacturing
• John Deer, Ford New Holland entered the market in 2000
with plants in Mumbai & Nagpur
• M &M is the market leader for 16 consecutive years in farm
Equipments
• 40% is replacement market and growing
• Export of tractors in 2004-05: 27,500 units
Company Wise Market Shares (2004-05)
Company Market Share %
M &M 26.50%
TAFE* 22.30%
Others** 13.90%
PTL*** 13.20%
Escorts 12.80%
International Tractors Ltd 11.30%
* Tractors and Farm Equipments Ltd
** HMT &Gujarat Tractors and etc *** Punjab Tractors Ltd
 Marketing of Agri inputs
• Factors influence the Demand of Tractors in India
– Landholding pattern (Ex: 8 to 10 Hectares for 25 HP;
25 to 30 Hectares for 35 HP and etc) Additional
factors: earning stability, type of soil, type of
operation & Affordability
– Irrigation potential
– Monsoon
– Availability of credit
– Income from Agriculture
– Scientific farming practice
– Multiple cropping
– Increase in literacy
– Priority of the farmer
 Marketing of Agri inputs
• Product
– Indian market characterized by Low price, no frills,
rugged, versatile and low to High power tractors
– Other machineries used with the tractor for tilling,
ploughing, sowing seeds etc are:
• Mounted Offset Disk Harrow
• Mounted Disk Plough
• Leveller
• Mounted Mould Board Plough
• Heavy Duty Tiller
 Marketing of Agri inputs
• Distribution
– Company appoints dealers in important Agri
centers.
– A dealer covers one dist or 2/3 teshils
– A dealer’s earnings depends on model and
accessories sold (30,000 to 60,000 and more)
 Marketing of Agri inputs
• Promotion
– Advertisement: Regional TV, Newspapers, Agri
Magazines
– Farm-to-Farm visit
– Melas: Religious mela (Kumbh Mela) or non-religious
mela (Pushkar Mela) or Agri fairs
– Demostrations
– Wall paintings, hoarding, Signboards and paintings on
buses &bus stops
– Opinion Leaders (90% of sale is through bank loans)
 Marketing of Agri inputs
Current Indian tractor scenario
– India vast country – diff agro-climatic zones – farm
holding are small and isolated
– Limited financial resources to modernize farming
– Cost maintaining livestock and labour wages
increasing. The shortage of labour at peak times
like sowing & harvesting increasing
– Now tendency towards using agri machinery is
more. Hiring is generally practiced
 Marketing of Agri inputs
Suggestions to make adequate farm power
• Encourage tractarisation through
– Group Tractor loans
– Self-employment scheme for rural youths
– Subsidizing tractor costs
• Liberalization of tractor financing in areas like dry
land, drought prone and hilly areas
• Availability of spare parts, after sales service and
repair facilties for the benefit of tractor owners
• Insurance cover for tractors