Policies for rapid growth in use of modern agricultural inputs: the case of fertilizers

Abstract

Accelerated growth in agricultural production of developing countries depends on fuller exploitation of the existing production potential and continuously raising the potential through technological changes. This requires sustained rapid growth in the use of inputs like seeds of better quality, fertilizers, pesticides, and farm implements and machinery. In discussions on how to increase the use of these inputs, price policy issues dominate. Often these issues are discussed without sufficient attention to certain non-price factors and policies which also influence growth in the use of inputs. This paper demonstrates that such an approach is lop-sided, and could be misleading in examining the role and limitations of price policy in growth of use of modern agricultural inputs in developing countries. After briefly reviewing past growth of fertilizer use in developing countries, the paper presents a heuristic framework which brings out the policy requirements for rapid growth of fertilizer use. The usefulness of such a framework is demonstrated by focusing on the experience of India. Major conclusions of the paper which highlight the role and limitations of price policy in growth of fertilizer use in the developing world are brought together in the last section.