Reducing dependence on chemical fertilizers and its financial implications for farmers in India

The fertilizer intensive technology so long promoted in agriculture produced a green revolution but has brought long-term damages to soil quality. The technology now appears unsustainable for future agricultural development in India both on account of its ecological implications and the burden on the budget. There is now a need to revisit the traditional methods once used in agriculture and to look for a judicious blend of chemical fertilizer based technology with organic manure. Since manures are relatively less productive in the short run there is an alarm that a shift in technology away from the chemical fertilizer towards organic manure may mean a compromise in production or may hurt the incomes of farmers. This paper emphasizes the environmental benefits of a possible shift in agricultural technology, while keeping in view the importance of sustaining crop yield levels and protecting farmers' incomes. Considering two major crops in India in specific states the paper finds that over time while fertilizer use intensified several times over, the use of manure in agriculture either stagnated or declined. The manure market remained localized, limited and unorganized and its price was significantly higher than fertilizer in terms of nutrients in contrast to the organized and state supported fertilizer market. The paper estimates quadratic yield functions based on cross-section household level data and using the prices faced by farmers as reported by official survey finds that in majority of the cases there will not be any financial loss resulting from a small shift in technology towards organic manure. Such a shift can however be considered feasible if the losing households are compensated and if manure price is kept in control by promoting a more dynamic manure market. (C) 2004 Elsevier B.V. All rights reserved.