POLITICS OF FERTILIZER SUPPLY TO AGRICULTURE 61


The question is whether some among those 30 have a higher interest in influ- encing the current policy process than others and whether they are, in fact, acting accordingly.


Interests of urea-manufacturing units vary according to the feedstocks they use. Because energy costs make up between 60 and 70 percent of the total cost of production, the higher the feedstock price, the higher the cost of production. In general, plants that use natural gas as the feedstock pro- duce urea at the lowest cost. Plants that use naphtha, fuel oil, and other feedstocks have substantially higher costs of production on account of lower efficiency as well as higher supply costs. The vintage of the plant also affects its efficiency.


Given that some of the urea plants are in the public sector, it is reasonable to assume that the reform of the government’s policy on urea production has intersected with the general discourse on privatization. It is also likely that, in general, urea plants demonstrate differences in interests based on the feed- stock used and the vintage of the plant. Given the small size of the domestic fertilizer industry, it can be expected that interest articulation and advocacy by the industry and its representatives will be focused and effective. The impact of the discourse on privatization on the debate on fertilizer policy is not easily discernible. However, concerns about possible privatiza- tion of public-sector units, such as National Fertilizers, may have played a role in the formulation of the NPS. It is also difficult to trace differences in positions according to feedstock use. At times, owners of gas-based plants have asked to be decontrolled. They argue that given the higher import par- ity price during the past few years, they have been subsidizing the farm sec- tor instead of receiving subsidy. In general, the industry is very organized and articulate in its lobbying efforts and rarely allows internal divisions to surface.


The fertilizer industry articulates its interest and lobbies with the govern- ment through various channels. First, it has a representative trade body, the FAI, which acts as the industry’s representative on government committees such as the Fertilizer Industry Coordination Committee (FICC) on a regular basis and serves on other committees on an ad hoc basis. The FAI also lob- bies with the different ministries involved in developing policy on fertilizers and uses the media extensively to express its position.2 Second, individual owners of firms lobby their cases with specific ministers and ministries. Third and most important, the industry’s interests are the primary concern of the DoF within the MoCF. This is where the fertilizer industry gets most of its


2 Interviews with FAI officials, New Delhi, June–July 2005.


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