A business report on the manufacturing of bio-fertilizers

Abstract

With more than 99% of India’s fertilizer need is being fulfilled by Inorganic fertilizers1, India is completely dependent on the Inorganic fertilizer Industry for its food security. However, century long continuous usage of inorganic fertilizers has rendered our land infertile2 . In a growing food demand scenario, it is imperative to maintain the growth rates of agriculture production to sustain self sufficiency after the green revolution. With the government’s initiatives in the form of Organic farming policies, the infertile soil is expected to gain its earlier enriched state. Furthermore, the same organic policy opens doors to the rise of new Industry3 . Many entrepreneurs have identified the potential from the organic farming policies in the farm of mainstream farming for a niche segment or enterprises in organic fertilizers, pesticides, among other related fields. Bio-fertilizer is one of the inevitable components for organic farming. Also benefits in terms of improved yield, quality of foliage and soil, harmlessness, economical, among other have been advantages of using bio-fertilizers in agriculture crops. This opens a big opportunity for entrepreneurs in the SME sector considering nascent stage of the Industry. As the Industry is highly fragmented with low investment required for setting up a manufacturing plant (150MTA capacity require ~INR 7.4 million), a venture in the sector seems to be highly promising idea. Evaluation of Industry on five forces framework resulted in the medium level of attractiveness of the Industry. However, since the bio-fertilizer concept is new, there are many issues and challenges for the successful marketing and distribution of the bio-fertilizers. To help sustain the Industry, the government plays a very crucial role in spreading awareness in farmer community and distributing bio-fertilizer at subsidized rates to the farmers community through it Taluk level officers. This move has helped the entrepreneurs to survive in this business. Simultaneously, they are trying to penetrate the rural market through conventional distribution channels. Finance is easily available from the scheduled banks with CGTMSI, a central government’s body, extending a credit guaranty to entrepreneurs. With this scheme, there is no need to offer a collateral security. Also through government policy to promote bio-fertilizer market, a subsidy of up to INR 2 million is given. With assured purchase by the government, the debt can be easily paid. Conclusively, an Industry with no competition, with government’s assured support to help survive the market, assured finance for the investment, evolving new customer segments, and no price wars; among others give a very positive & ideal Industry for Propagatory venture creation.