In February 1997, the centre increased the subsidy of DAP by another Rs 750 per tonne, and also hiked subsidies of other products proportionately. The decision was, however, implemented from April 1, 1997. This resulted in holding back of fertiliser stock in March 1997, and to that extent, the build-up for kharif was affected.

On January 29, 1998, the government announced a reduction of Rs 250 per tonne in subsidy of DAP, with retrospective effect from October 1, 1997. Manufacturers and suppliers had already committed sales in the previous four months and lost heavily. This affected the stocking and supply of DAP and other complexes in February-March '98, which, in turn, undermined the availability of these products in kharif'98.

In this year's union budget, the urea price was increased by Rs 1,000 per tonne. It was reduced to Rs 500 per tonne the next day, and government circulars were issued to give immediate effect. For a couple of weeks in peak season, uncertainty prevailed in the market, and urea sales were affected. The increase of Rs 500 per tonne was subsequently withdrawn, but the damage had been done, and farmers could not buy urea in the peak season.

On August 28, 1998, the centre announced a new policy of increasing the subsidy of DAP by Rs 500 per tonne, and those of other products by bigger margins, but gave effect to them from October 1, 1998. The other major policy change was that manufacturers and suppliers would be free to fix their own farmers' prices without the centre or state governments participating in it.

Such a major policy decision should have been immediately implemented as was done on July 6, 1996, and manufacturers/suppliers should have been asked to announce their new prices within three tofive days. The 33-day delay in implementing the policy affected the supplies in September '98, which is crucial for the rabi season. Many manufacturers have not supplied material in September '98. Most had slowed down sales.

On September 23 this year, the decision announced on August 28 was reversed, and the prices for DAP, complex fertilisers, and potash were fixed at the same level of kharif '98 without announcing any increase in subsidy levels, which was particularly necessary for DAP. The prices of SSP were not announced, and these are now to be determined by the state governments, which will take a long time.

The point which must be understood is that the prevailing uncertainty is playing havoc with the availability of various products. Imports of DAP and MOP have been deferred or cancelled. Demand for phosphatic fertilisers will be extremely high in October/November/December owing to copious rains everywhere. If available, an increase of 15-20 per cent in the consumption of phosphate and potash overlast year's actual consumption in October/November/December is possible, but this is going to be denied because of the uncertain atmosphere and inadequate availability.

A few lessons emerge from these facts. The first is that any decision taken about price or subsidy must be implemented immediately, as was done in July 96. Secondly, any decision already announced in the market and implemented must not be withdrawn hastily without giving it a full and fair trial.

Thirdly, policy-makers must understand that the price of the fertiliser product is no doubt an important factor in increasing its consumption, but other parameters including good quality of the product, adequate availability and stocking well ahead of the season, particularly in the interior areas, are also equally important aspects which make or mar the consumption levels.

Those who worry about the price as a factor affecting consumption will do well to note that in 1991-92, the market price of DAP was Rs 4,860 per tonne. In 1997-98, the pricewas Rs 8,300 per tonne, a rise of Rs 3,440 per tonne, or Rs 172 per bag, of DAP in six years. Yet, the country's farmers showed a record consumption of 5.2 million tonnes of DAP in 1997-98.

Similarly, the price of urea of Rs 3,660 per ltonne, though very attractive in relation to phosphatic fertiliser products, is a higher price than what prevails in neighbouring countries. Even then, 19 million tonnes of urea was purchased by farmers in 1997-98. The price of SSP in 1991-92 was Rs 1,240 per tonne, and consumption was three million tonnes in 1997-98.

The average market price of SSP was Rs 2,750 per tonne, and the consumption level was 3.6 million tonnes. There is no doubt that the consumption level of various fertilisers can be sustained at fairly high levels even if the DAP price becomes Rs 13,000 per tonne, urea--Rs 6,500 per tonne, and SSP--Rs 4,500 per tonne in the next three to four years in a phased manner.

It is time the centre realised that there is a need to have a consistent policy for pricingand subsidy of fertiliser products. It must implement it on a long-term basis of say 18-24 months, as was attempted in August 1998, but withdrawn in September 1998. The centre cannot go on subsiding fertilisers.

The market price must be increased in a phased manner, and keep the subsidy pegged at certain levels, or reduce it. The government must also encourage production and use of indigenous phosphatic fertiliser, which are providing good outlets to indigenous raw material, and help in building a broad base for the indigenous industry.

It is unfortunate that a decision change on the eve of a promising season is going to affect availability and consumption, and farmers will have to pay a much higher price than stipulated by the centre because supply will fall short of demand. In future, we must avoid all such situations which go against the interests of farmers.