Comparison between India and Ethiopian fertilizer use Shawel Betru International Environmental Economics

India

Agricultural in India Indian agricultural policy has dramatically changed before and after 1947 independence – Focus from export crops to food crops – Food security has guided overall policy – High government involvement New Agricultural Strategy: – Chemical fertilizer – high yielding variety – Irrigation

Overview of fertilizer policy, India PeriodPolicy 1957Fertilizer control order (distribution and price) Before 1970Price control for Nitrogen fertilizer Oct 1970Review of fertilizer policy Common fertilizer pool 1973Reintroduction of distribution control (Essential commodity act (ESA)), fertilizer movement control order) 1974Fertilizer pool equalization charge (FPEC) Jan. 1976High Power Fertilizer Prices committee 1977Review of price control Retention price scheme for nitrogenous fertilizers Free allocation of specific quantity of fertilizers for Rabi (spring) and Kharif (autumn) 1988Revision of price control 1991Price decontrol for low analysis nitrogen fertilizers Sept 1992Import liberalization for raw materials 1994Decontrol price increase, price of urea increased

Nitrogen fertilizer growth

Increasing production of fertilizer Caused by – Commissioning of new gas based plants in 1980s – Increasing capacity utilization 60% in 1970 to 90% in 1990s Most of nitrogen fertilizer production is controlled by public sector – Lower capacity utilization

Present trends Decreasing and abandoning fertilizer subsidy Changing feedstock from naphtha and coal to LNG Joint venture aboard: Senegal, Jordan, Iran and Oman

Ethiopia

Fertilizer policy, Ethiopia The first comprehensive fertilizer policy was introduced in 1993 by TGE (transitional government) Between the parastatal corporation called AISCO completely and officially controlled fertilizer sector fertilizer subsidy was introduced – Meant to offset effect of currency devaluation – Subsidy did not exceed 25% of unsubsidized price price decontrol was made

Fertilizer production and import There is no production of inorganic chemical fertilizers in Ethiopia In 1993 the government and WB intended to establish fertilizer factory but there is no fertilizer factory in Ethiopia and therefore, all inorganic fertilizers.

Cereal yield growth, Ethiopia

Harvesting land

Import and marketing Fertilizer import in Ethiopia is controlled by parastatal companies AISCO Dinsho (oromia)Wondo ( South ) Ambasel (Amhara) Guna ( Tigray) YARA DA

Import and marketing Regional governments guarantee development banks on fertilizers credit The development agents are responsible for collection of credits Availability of credit is mostly politicized especially during elections

Import and marketing Inaccessibility of farming areas and absence of sea port increased price and decreased use Possibility of increasing arable land discouraged fertilizer use In the past price of crops were controlled by the government which disfavor farmers Ineffective extension system that depend of propaganda than actual profitability

Policy objectives failures The number of people with chronic food shortage has increased to more than 5 million There are no private companies in any form No significant progress in establishing fertilizer factory

Comparison VariablesIndiaEthiopia Occurrences of famineSix, (since 1880s to 1943) Three (1890s, 1974 and 1984) Population>1 billion80 million Average cereal yield2.5 t/ha1.6 t/ha Fertilizer use (2005)129kg/ha10kg/ha Total fertility rate (2005) Fertilizer productionMore that 60No Ethnic politics (north-south divide)ImplicitExplicitly since 1991

Cereal yield growth

Fertilizer consumption

Arable land

SimilaritiesDifferences High rate of poverty (44% Eth, 26% Ind)Dynamic fertilizer sector policy Dependence on central planning in AgriMajor role of private sector High rate of initial population growthWell developed fertilizer industries North south divide30 times higher road network Central planning is prevalentLower per capita external aid Comparably high GINI coefficientAgriculture contribution to GDP is lesser Favored high potential areasSuperior irrigation system and available water (TRWR= 40 times bigger)

Conclusion India has room for improvement in fertilizer production and use – Policy change is obstructed by interest groups Need institutional stability Ethiopia has the potential to initiate production of nitrogen fertilizer and increase use – Encouraging private companies involvement – Better market environment – Efficient use of extension agents

Next plan Prospect of fertilizer supply in India Policy changes required in fertilizer sector Potential of establishing Ethiopian fertilizer industry

Cereal yield

Harvested area

Cereal yield