Fertilizer for farmers

The government of Sri Lanka has introduced a number of policies and programmes to increase paddy production since Independence and the Fertilizer Subsidy programme is one of them. It was initiated in 1962 (that is, at the onset of the Green Revolution) and has been in operation for more than five decades. The main objective of the programme is to induce farmers to adopt high-yielding varieties with a view to achieving self-sufficiency in rice in the country, as well as to ease the burden on farmers’ budgets.

In 2016, the methodology of granting the subsidy was changed and the Fertilizer Cash Grant (FCG) programme was introduced and implemented during the cultivation seasons from Yala 2016 onwards. The main objectives of introducing the FCG programme are to eliminate the overuse of inorganic fertilizer, to enhance the usage of organic fertilizer, and to allow the farmer to make effective decisions with regard to the application of fertilizer, such as identifying the most suitable quantities of fertilizer required for their fields by conducting a soil test.

Cash instead of fertilizer

Prior to the introduction of the FCG programme in the Yala 2016 season, the Fertilizer Subsidy programme was in force from 2005 to 2015. Under the Fertilizer Subsidy programme, three main fertilizers - urea, TSP and MOP - were issued as straight fertilizer and a farmer was eligible to get the subsidy for five acres or two hectares or less per season. Fertilizers were issued on the basis of recommendations given by the Agriculture Department and all fertilizer recommendations were based on agro-climatic zones and irrigation schemes (major irrigation, minor irrigation and rain fed irrigation). Therefore, quantities were issued according to the land extent and respective fertilizer recommendation.

Under this scheme, the subsidy was granted for both paddy and other crops. Paddy farmers had to pay Rs. 350 per 50 kg bag and it was compulsory for them to contribute to a crop insurance scheme by paying Rs. 150 per 50 kg. For other crops, a 50 kg bag of straight fertilizer was issued at a price of Rs. 1,250. The fertilizer was available in the open market too at a price of Rs. 1,250 per 50 kg.

With the change, farmers are entitled for a cash subsidy of Rs. 25,000 per hectare per year subjected to a maximum of Rs. 50,000 per year, under the FCG programme. Accordingly, a farmer with two hectares will receive Rs. 25,000 for the Yala season and Rs. 25,000 for the Maha season. In contrast to the Fertilizer Subsidy programme, the cash grant is purely based on the land extent. The maximum retail price of a 50 kg bag of straight fertilizer, that is urea, TSP and MOP, is Rs. 2,500 and farmers are expected to buy the available fertilizer according to their requirement from the cash grant they receive. Farmers who are cultivating potato, onion, chilli, soya bean and maize are also entitled to this cash subsidy and they will get a cash subsidy of Rs. 10,000 per hectare per year per farmer.

What do farmers think?

In 2017, the Hector Kobbekaduwa Agrarian Research and Training Institute (HARTI) conducted a Farmer Survey to ascertain farmers’ responses towards the FCG programme and this article presents the main findings of the study.

A sample of 270 paddy farmers from six districts (Anuradhapura, Ampara, Kilinochchi, Kurunegala, Polonnaruwa and Matara) was interviewed for the study. The sample represented major, minor and rain-fed irrigation schemes and the low-country dry and intermediate zones and the low-country wet zone. The FCG programme has been implemented since Yala 2016 and at the time of the study, the farmers had cultivated Yala 2016, Maha 2016/17 and Yala 2017. Therefore, they shared their experiences with respect to these three consecutive seasons.

The majority of farmers interviewed for the survey were landowners and the majority of the farmers in Anuradhapura, Ampara, Kilinochchi, and Polonnaruwa had paddy farming as their main income source. However, paddy farming was not the prominent income source in the Kurunegala and Matara samples.

The majority of farmers have not experienced a significant change either in their cultivated extent or with the harvest as a result of the introduction of the FCG programme. Yet, a few farmers had experienced a decrease in the cultivated extent and harvest. The delay in getting the cash grant and the insufficiency of the grant to buy the required amount of fertilizer were the reasons for the decrease.

Similarly, the majority of farmers have not experienced a significant change in usage of organic fertilizer from inorganic fertilizer with the introduction of the FCG programme. The majority of farmers said that they had difficulties in using organic fertilizer though they would like to increase its usage. The main difficulties mentioned by the farmers in using organic fertilizer were the difficulty in finding enough, lack of space, time to prepare, lack of raw material to prepare, requirement of large quantities and lack of knowledge of the preparation and the importance.

Did it work?

Farmers’ opinions with respect to the advantages and disadvantages of the FCG programme and the previous Fertilizer Subsidy programme were studied and the main points highlighted by them are presented in the two tables.

This reflects that better control over time of buying, place of buying, quantity of buying and quality of buying are considered as advantages of the FCG programme. All the disadvantages are related to the delay in providing and the insufficiency of the grant and the non-availability of fertilizer in the market when required.

On the other hand, the advantages highlighted by farmers with respect to the previous programme also could be achieved with the FCG programme, if the implementing errors such as not providing on time, non-adequacy of the grant, and non-availability of fertilizer in the market could be corrected. Further, though the majority of farmers stated that they did not get the grant at the time they required it, the majority had applied the required amount on time. Nearly two-thirds of farmers had used their own money to buy fertilizer, followed by those who had obtained loans from informal sources, purchased on credit from fertilizer vendors without any interest, or purchased by pawning jewellery.

In addition, with respect to the preference, 48 percent of the entire sample of paddy farmers prefer the previous Fertilizer Subsidy programme and 38 percent prefer the Fertilizer Cash Grant programme, while 14 percent do not prefer both programmes, suggesting a new method. Of the farmers who suggested a new method, they preferred any other method that could provide good quality fertilizer on time. Therefore, it can be noted that the farmers are not strongly accepting or rejecting the previous programme or the Fertilizer Cash Grant programme.

The main four reasons for the preference of the cash grant were the possibility to buy when needed and in the quantity they needed; the possibility to buy when needed from any convenient place; less time consumption; and the possibility to buy any good quality brand as per the choice.

On the other hand, the reasons to prefer the previous programmes were its cheapness and ease in getting fertilizers to the field; receipt of the required amount of fertilizer totally; receipt of fertilizer on time; and guarantee of applying fertilizer on the field and less chances of misusing the money.

Cash Grant programme

Therefore, from the findings it can be noted that the Fertilizer Cash Grant programme is not entirely a failure. However, there were implementation errors such as it not being provided on time, non-adequacy of the grant and the non-availability of fertilizer in the market. On the other hand, officials who implemented the programme also were of the view that the Fertilizer Cash Grant programme was more desirable than the previous programme as they were now able to complete their responsibilities with much ease and care and with high accuracy and transparency and could implement it with less time and with limited corruption.

Further, the administrative costs of Cash Grant programme were much less, because it has high initial fixed costs, but modest subsequent annual costs. In addition, the FCG programme is a more environmentally friendly concept as overuse of inorganic fertilizer could be minimised with the new programme.

Therefore, in this context, the FCG programme is more desirable as a concept, which provides benefits to all stakeholders - farmers, the government and implementing officials. It helps to minimise the negative environment hazards as well.

Therefore, if the implementing errors such as not providing it on time, non-adequacy of the grant, and non-availability of fertilizer in the market could be corrected, the Cash Grant Programme would be more desirable for the country and for the farmer community.