What does data on fertiliser sales tell us about the Indian economy? How can it be used?
The Sales Pulse captures the entire agro-rural economic pipeline of demand and consumption. In the previous article on Rainfall departures, we saw how the data on rainfall departures is indicative of how the sowing patterns in rural farmlands could look like. The deficiency of rainfall is not only important for the farmlands, but has a domino effect on the entire rural economic pipeline.
Sales of fertilisers is yet another predictive indicator of how the rural economy will fare. Farmers typically buy the fertilisers required for the sowing season beforehand. Hence, the level of fertiliser sales would indicate the level of agricultural produce the farmers expect in the season. The time between the purchase of the fertilisers and the reaping of the produce would be typically 2-3 months. Rural consumption would then depend upon the level of agricultural produce.
Fertiliser sales would thus, give us a peek into what rural consumption could look like, at least 60 days in advance.
Types of fertilisers
The Sales Pulse tracks all the major types of fertilisers that are used in Indian farms. These include:
- Di-Ammonium phosphate (DAP)
- Muriate of Potash (MOP)
- Phosphatic and Potassic (P&K)
- Single superphosphate (SSP)
The fertiliser used is dependent on the crop and the type of soil.
Each of these fertiliser type is then tracked at two levels of sales:
- Point of sale (PoS)
Over the past several years, the Government of India has been nudging sales of fertilisers to shift from retail to PoS. This is primarily so that the GoI can track the beneficiaries of the fertiliser subsidy and can efficiently implement the Direct Benefit Transfer (DBT). In mid-last year, the GoI moved all retail sales of fertilisers to PoS mandatorily. Hence, since August 2020, all fertiliser sales in the country are routed through PoS machines.
The Sales Pulse captures both, the absolute amount of fertiliser sales in the district, as well as the percentage change in the current month over the same month last year. The y-o-y change is calculated since fertiliser sales, like many other indicators is a seasonal indicator and it makes more sense to compare it to the previous year rather than the previous month.