Agribusiness Management and the Fertilizer Industry Value Chain | A++ Rated MBA college in Bangalore

Posted by Prof Manoranjan H P On 04/06/2022 08:37:00

In India, agriculture provides a living for roughly 60% of the population. Fertilizer has a significant impact on agricultural productivity. As a result, the fertilizer business is one of the major determinants of agriculture and rural India's economy. India is the world's third-largest chemical fertilizer manufacturer. Our government spends about Rs 800 billion on fertilizer subsidies every year.  A++ Rated MBA college in Bangalore

Because there are so many unknowns in the fertilizer sector, managing the entire supply chain becomes complex. Let's talk about the many steps in the supply chain, as well as the procedures that occur inside those steps.

Procurement of raw materials

Because the raw ingredients for the fertilizer business, such as rock phosphate and sulfur, are not readily available in India, and ammonia output is also low, many fertilizer manufacturing enterprises in India import the raw materials needed for the manufacturing process. This procurement of raw materials necessitates a number of procedures, including contracts with suppliers, dealing with the government regarding customs, port operations, and so on. It also necessitates dealing with external agencies for the completion of import procedures, raw material transportation from the port to the plant, and storage. Best MBA college in Bangalore

Manufacturing Process

The manufacturing of fertilizers is classified as a process industry. Manufacturing in the process sector, such as fertilizer manufacturing, is more complicated than manufacturing in the mechanical business. Because the fertilizer manufacturing process cannot be stopped as easily as mechanical manufacturing, careful planning is required. Because of their nature, the processes are largely automated. As a result, it necessitates a higher level of engineering and technology. Various processes must also be coordinated to follow a precise sequence in order to obtain the final result.


Distribution of the finished product

When the fertilizer is ready, make certain that all of it is available to all possible consumers (farmers). It is, once again, a challenging task in the fertilizer industry. Because potential clients are dispersed across the country's rural areas, the distribution network is extensive and takes more resources to manage. The plant's consistent output pattern should correspond to the extremely variable demand patterns in different parts of the country. This necessitates a high level of preparation from management as well as a high level of warehousing facility availability.

Because demand for fertilizer exceeds supply in India, promoting and selling fertilizer is a simple task. As a result, once the product hits the market, it can be sold. Distribution is the most important marketing role in the fertilizer sector.

Central planning

The most significant role in this fertilizer value chain is the planning and coordination of all of these important chain functions. A corporation must plan for ordering raw materials based on demand patterns and production requirements while procuring raw materials. Hedging tactics should be used to mitigate the risks of currency fluctuations and foreign market price fluctuations while purchasing raw materials. Production cannot be done in accordance with demand patterns in the industrial process. As a result, fertilizer output should be planned to fulfil seasonal demand.

Conclusion: Because the worldwide market for fertilizer raw materials is oligopolistic, raw material prices are heavily influenced by environmental factors. Fertilizer costs are also high. The fertilizer sector is also influenced by government fertilizer policy, monsoon patterns, and other factors. In a highly complex and uncertain industry where changes are difficult to predict and influence, the only way to succeed is to develop a competitive advantage by building a strong and supportive supply chain and managing it efficiently by allocating necessary resources to the supply chain's various elements.

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