Market Analysis of Organic Fertilizers in India
The relevance of research
Organic fertilizers are fertilizers containing plant nutrients mainly in the form of organic compounds. Organic fertilizers contain nitrogen, phosphorus, potassium, calcium and other plant nutrients, as well as organic matter, which has a positive effect on soil properties. Organic matter plays a crucial role in agriculture, therefore it is widely used to increase yields by creating fertile soil.
Purpose of the study
Analysis of the state of the organic fertilizer market, assessment of the market size, analysis of competitors, as well as identification of factors affecting the organic fertilizer market
Content
Part 1. Overview of the Indian Organic Fertilizer Market
1.1. Main characteristics of the market
1.2. Dynamics of the market volume of organic fertilizers 2017-2021 Potential market capacity
1.3. Assessment of factors affecting the market
1.4. Stage of the life cycle of the market of organic fertilizers
1.5. Competition from substitute products
Part 2. Competitive analysis in the market of organic fertilizers
2.1. Major players in the market
2.2. Market shares of the largest competitors
2.3. Profiles of major players
Part 3. Analysis of organic fertilizer production
3.1. Volume and dynamics of domestic production of organic fertilizers
3.2. Share of exports in the production of organic fertilizers
3.3. Segmentation of organic fertilizer production by regions
3.3.1. Production by Union Territories
3.3.2. Production by states of India
Part 4. Analysis of foreign trade supplies of organic fertilizers
4.1. Volume and dynamics of imports of organic fertilizers
4.2. Import structure
4.3. The volume and dynamics of exports of organic fertilizers
4.4. Export structure
Part 5. Analysis of consumption of organic fertilizers
5.1. Dynamics of consumption of organic fertilizers
5.2. Analysis of the results of tenders for the purchase
Part 6. Price Analysis
6.1. Average producer prices by union territories
6.2. Average consumer prices by states in India
Part 7. Assessment of factors of investment attractiveness of the market
Part 8. Forecast for the development of the organic fertilizer market until 2026
Part 9. Recommendations and conclusions
Research excerpt
Part 1. Overview of the Indian Organic Fertilizer Market
1.1. Main characteristics of the market
Organic fertilizers are fertilizers containing plant nutrients mainly in the form of organic compounds. These include manure, composts, peat, straw, green manure, silt (sapropel), complex organic fertilizers, industrial and household waste, etc.
Organic fertilizers contain nitrogen, phosphorus, potassium, calcium and other plant nutrients, as well as organic matter, which has a positive effect on soil properties.
Organic fertilizers consist of substances of animal and vegetable origin, which, decomposing, form mineral substances, while carbon dioxide is released into the surface layer, which is necessary for plant photosynthesis. Organic fertilizers have a beneficial effect on the water and air nutrition of plants, promote the development of soil bacteria and microorganisms that live in symbiosis with the roots of vegetable crops and help them get available nutrients.
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Organic matter plays a crucial role in agriculture, so it is widely used to increase yields by creating fertile soil.
A feature of the market is that organic fertilizers are created and consumed by the farms themselves, that is, market receipts are in most cases limited. This is confirmed by the data of Rosstat on the application of organic fertilizers for crops in agricultural organizations.
Diagram 1. Dynamics of organic fertilizer application for crops in agricultural organizations in India in 2013-2021, million tons.
The dynamics of organic fertilizer application until 2020 was growing, the average annual growth rate is ...%.
1.2. Dynamics of the market volume of organic fertilizers 2017-2021 Potential market capacity
Consider the dynamics of the volume of the organic fertilizer market in India for the period 2017-2020.
Diagram 3. Dynamics of the market volume of organic fertilizers, 2017-2021, thousand tons
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In this regard, the indicator depends on the data disclosed by one of the main market participants - agro-industrial holdings of mixed agriculture, and livestock farms, the main activity of which is, for example, breeding pigs and poultry, processing, production of meat products and animal feed, etc. These companies work in the interests of their own needs (such volumes of organic fertilizers do not form a market) and supply products to the market for the purpose of sale (the market indicator depends on information for this category).
Calculation of revenue distribution across the Union Territories was made by GidMarket on the basis of data on the production of organic fertilizers in the Union Territories, on imports and exports from / to federal districts.
The structure of revenue in the union territories differs significantly depending on the period, which is primarily due to the unstable structure of production.
1.3. Assessment of factors affecting the market
Macroeconomic factors influence the dynamics of all sectors of the Indian economy, including the organic fertilizer market.
The main groups of factors are: economic, political, social and technological.
- Economic forces
GDP dynamics
Gross domestic product (GDP) is a macroeconomic indicator that reflects the market value of all final goods and services produced per year in all sectors of the economy in India for consumption, export and accumulation, regardless of the nationality of the factors of production used. Gross domestic product is the main indicator based on which the level and pace of economic development are determined.
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According to the Research and Forecasting Department of the Bank of India, the main factors that helped to significantly mitigate the economic downturn in 2020 are:
- Growth of social budget expenditures aimed at supporting incomes and demand. The peak of anti-crisis budget expenditures occurred at the end of the nd - beginning of the rd quarter.
- Monetary policy easing.
- Measures to support lending. Regulatory easing allowed banks to increase lending to both the corporate sector and households.
Short-term positive momentum from the removal of most of the restrictive measures at the end of the second quarter. First, this was reflected in a more active recovery of economic activity in the summer months compared to initial expectations, which took place in the conditions of an outstripping closing of the output gap in consumer demand sectors. Secondly, the pinpoint nature of the restrictions due to the autumn increase in the incidence kept the dynamics of consumption from a sharper drawdown.
- Replacing foreign tourism with domestic.
- ...
- The strengthening of the national currency has a positive impact on the market of organic fertilizers.
- ...
- Cultivated areas of agricultural crops
- ...
- Livestock of farm animals
- ...
Seasonality
Demand in the fertilizer market is seasonal and increases 1-2 months before the start of the sowing campaign, when supply contracts are concluded, after which demand decreases.
COVID-19 pandemic
In 2020, the spread of a new coronavirus infection, first in trading partner countries, and then in India, had an increasingly negative impact on the Indian economy. The introduction of non-working days, as well as additional restrictions on the operation of certain industries, led to a significant decrease in economic activity.
At the very beginning of spring field work in 2020, due to the isolation regime, the activities of service organizations and spare parts store for equipment were suspended. Agricultural enterprises had to restructure their work. Distribution channels have been redistributed. This especially affected the farmers of the region with their own processing, vegetable growers and potato growers. Restrictions on the movement of seasonal workers also played their role.
The industry was affected not only by quarantine and isolation but by the overall economic situation: the cost of spare parts for equipment, and fertilizers coming from foreign markets rose.
Like the rest of the global industry, the organic fertilizer industry has faced additional costs since the onset of the pandemic to protect employees and keep operations running smoothly.
Animal husbandry, cultivation of greenhouse crops and activities related to sowing are classified as continuous cycle enterprises, respectively, they did not fall under restrictive measures and were not stopped. In this regard, despite some difficulties, the losses for this area due to the pandemic were minimal.
The coronavirus has more clearly shown the value of organic production as a factor in the formation of strong immunity of the population through high-quality healthy nutrition and, in general, has increased the level of understanding of the importance of an environmentally friendly environment. Responsibility for the impact on the body, soil, air, groundwater, living organisms and their natural relationship in nature has become more obvious to market participants, the expert community and consumers. There has been a reassessment in favor of organic agriculture.
- Social factors
Population
Since the beginning of 2019, there has been a decrease in the population in India, which negatively affects the market in question.
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The real income of the population
General trends in macroeconomic indicators can also be traced in such a value as real incomes of the population, which determine the level of effective demand. The diagram shows the dynamics of the growth rate of this indicator.
Chart 10. Dynamics of real disposable money income of the population of India, 2014-2021, Q2 2022, % to the previous year
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The decline in household income leads to a general reduction in demand in many areas of the economy, both from end consumers (B2C segment) and from enterprises (B2B segment), and therefore this factor has a negative impact on the organic fertilizer market.
Healthy lifestyle trend
In the modern world, more and more people are asking the question of a healthy lifestyle. Proper nutrition is an integral part of it.
Ten years ago, the world's population was not so passionate about taking care of their health and the environment. But today, the trend of self-care, and maintaining a healthy lifestyle is gaining momentum. In addition to exercising, proper nutrition is gaining popularity.
Over the past few years, health food stores, both online and offline, have begun to appear, popular people began to talk about their proper nutrition and training on social networks. All this affects the popularity of healthy lifestyles.
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- Technological factors
Availability of agricultural machinery
When evaluating the indicator, all equipment available in agricultural enterprises of all forms of ownership, except for personal subsidiary plots, is taken into account.
The development of markets for substitute products is a factor that negatively affects the market for organic fertilizers.
New technologies in the industry
One of the labor-intensive tasks in agriculture is the application of fertilizers to improve soil fertility. Methods for processing manure to obtain high-quality organic fertilizers are:
- the division into fractions;
- composting;
- application in biogas plants;
- vermicultivation;
- biological ponds (using insect larvae and bacteria).
One of the ways to improve the efficiency of agriculture is the use of precision farming technology. With this technology, organic fertilizers are applied differentially, that is, not according to an average dose based on the average content of nutrients in the soil of the field, but depending on their content in individual parts of the field. This allows you to significantly reduce the diversity of soil fertility of the field. At the same time, the costs of applying solid organic fertilizers are also reduced due to a decrease in the total amount of applied fertilizers. This decrease is due to the fact that the areas of the field are not over-fertilized.
The efficiency and environmental safety of the use of organic fertilizers depends on the appropriate machinery and equipment. To carry out the operations of transportation and application of liquid organic fertilizers, a fairly large number of machines have been developed that differ in productivity, fuel consumption, technological indicators and price.
With increasing professional requirements for the precise application of liquid organic fertilizers, it is especially important to accurately analyze the respective fertilizer ingredients. Near infrared sensors (NIRS) are currently being used to assess the nutrient content of liquid manure. Companies offer systems for determining nitrogen, phosphorus and potassium in manure based on a nuclear magnetic resonance sensor.
Import dependence of technical means for the production and use of organic fertilizers.
- Political factors
Certification
Certification is the process of confirming the quality of goods and services in accordance with regulatory legal acts (GOST, Technical regulations).
Certification of organic fertilizers is optional. At the request of the manufacturer (supplier), a voluntary compliance procedure for fertilizers of organic origin is carried out.
Organic fertilizers are agrochemicals and require State registration of the Customs Union. The container in which the product is packed is also subject to this procedure. The certificate has a validity period of one to three years.
State regulation
Federal Law No. 03.08.2018-FZ dated August 280, 1 “On Organic Products and Amendments to Certain Legislative Acts of India”, developed by the Ministry of Agriculture of India, came into force on January 2020. The document consolidated the concept of organic products, regulates the norms of production, storage, transportation, labeling, sales, etc.
When conducting organic agriculture, the use of agrochemicals, pesticides, antibiotics, growth stimulants, animal fattening, hormonal preparations, genetically modified organisms, etc. is limited.
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- State support measures for the industry
- Support for Indian agricultural enterprises producing organic products for export
- Preferential leasing
- Preferential loans to farmers
- moratorium on bankruptcy
- Moratorium on scheduled business inspections
- State Program for the Development of Agriculture
The State Program for the Development of Agriculture and the Regulation of Agricultural Products, Raw Materials and Food Markets (as amended on April 19, 2022) was approved by the Government of India by Resolution No. 14 dated July 2012, 717.
The main problems in the implementation of the State Program at the current stage are:
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Let's present the results of the analysis of factors influencing the market in the form of a STEP-analysis table.
Table 5. STEP analysis of factors affecting the organic fertilizer market
Thus, at the moment, the Indian market of organic fertilizers is generally negatively affected by environmental factors of medium strength.
Restrain the development of the market: instability of the situation, determined by the impact of the coronavirus, the decline in economic activity, the the tense foreign policy situation, the decrease in the number of farm animals, the seasonality of the market, the decrease in the number of machines for organic fertilizers, the development of the market for substitute goods, the import dependence of technical means, the decrease in the population and its real cash income.
A group of political factors positively influence the market, including the absence of the need for mandatory product certification, state regulation and state support measures, and the agricultural development program in India. Also, positive factors are the strengthening of the rupee, the growth of acreage for some crops and the trend towards a healthy lifestyle.
1.4. Stage of the life cycle of the market of organic fertilizers
The organic fertilizer market is at the growth stage of the life cycle.
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The following factors contribute to the development of the biofertilizer market:
- The growing demand for organic products is generating demand for organic fertilizers that do not pollute the soil, water and do not contain nitrates.
- Development of technologies for the production of nitrogen-fixing biofertilizers.
- New care systems are being introduced, drip and sprinkler irrigation, and farmers' awareness of the peculiarities of caring for plants in the process of applying natural fertilizers is growing.
- Ease of use of nitrogen fertilizers: in the form of a powder, or liquid formulations.
- Expansion of areas for growing organic fruits and vegetables.
- Synthetic fertilizers reduce soil fertility. As an alternative, farmers are switching to organic fertilizers.
1.5. Competition from substitute products
Timely application of the necessary fertilizers to the soil provides:
- the presence of all the necessary components for the normal growth and development of crops;
- high coefficient of fertility, obtaining a good harvest;
- reducing the risk of various diseases in plants;
- resistance to constant changes in weather conditions, strengthening the immunity of crops.
There is a wide range of fertilizers from different manufacturers on the market. All of them are divided into two main groups: mineral and organic.
Mineral fertilizers are inorganic compounds containing high concentrations of plant nutrients in the form of various mineral salts. Such fertilizers are obtained chemically, they are used when there is a lack of individual minerals in the soil.
For normal development, crops need to receive nutrients in sufficient quantities, both mineral and organic fertilizers help them in this. Each group of fertilizers has its own advantages and disadvantages.
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Consider the volume of the mineral fertilizer market in India.
The volume dynamics of the mineral fertilizer market are growing ...
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Thus, the market of organic fertilizers is represented by quite strong competition from substitute products - mineral fertilizers.
Part 2. Competitive analysis in the market of organic fertilizers
2.1. Major players in the market
There are no large manufacturers in the organic fertilizer market that supply their products throughout India, and who cooperate simultaneously with many different agricultural enterprises in the country. As a rule, deliveries in India are carried out by companies that specialize only in the production of fertilizers, so they develop their activities by expanding sales markets, but the share of such manufacturers is currently insignificant.
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2.2. Market shares of the largest competitors
The shares of competitors in the organic fertilizer market in India are determined based on an assessment of the financial parameters of the operating activities of manufacturing companies.
The cumulative share of the main producers specializing in the production of organic fertilizers is ...
The Herfindahl-Hirschman index for the organic fertilizer market is less than 2 (HHI 1000), and the market is low concentrated.
2.3. Profiles of major players
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Part 3. Analysis of organic fertilizer production
3.1. Volume and dynamics of domestic production of organic fertilizers
Let's consider the dynamics of organic fertilizer production volumes in India.
Diagram 15. Dynamics of organic fertilizer production in India for 2017-2021, thousand tons
The dynamics of the volume of production of organic fertilizers for the period 2017-2021 are growing. The growth rate of the market volume is not stable, there are periodic significant jumps in the growth of organic fertilizer production.
The dynamics of the total revenue of the leaders among Indian producers of organic fertilizers is linear.
3.2. Share of exports in the production of organic fertilizers
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The production of organic fertilizers in India is aimed mainly at meeting the needs of the country's domestic market.
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3.3. Segmentation of organic fertilizer production by regions
3.3.1. Production by Union Territories
Table 9. Dynamics of organic fertilizer production in India by union territories in 2017-2021, thousand tons
The structure of the production of organic fertilizers in the Union Territories is unstable.
3.3.2. Production by states of India
The production of organic fertilizers in India is concentrated in the regions of the Volga Federal District: ...
Part 4. Analysis of foreign trade supplies of organic fertilizers
4.1. Volume and dynamics of imports of organic fertilizers
Consider the indicators of foreign trade operations in the organic fertilizer market in India.
Diagram 19. Volume and dynamics of imports of organic fertilizers in physical terms in 2017-2021, thousand tons
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The dynamics of imports in value terms is generally similar to the change in the indicator in physical terms: ...
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4.2. Import structure
...
4.3. The volume and dynamics of exports of organic fertilizers
Diagram 23. Balance of exports and imports in the Indian organic fertilizer market in 2017-2021, thousand tons
During the period under review, the trade balance (the difference between exports and imports) in the market remains positive. In 2021, the volume of exports exceeds imports by more than 3 times.
4.4. Export structure
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Significant changes in the structure of exports are also observed in 2016-2017, when the share of exports to non-CIS countries was ...%.
Part 5. Analysis of consumption of organic fertilizers
5.1. Dynamics of consumption of organic fertilizers
The volume of per capita consumption in value terms is calculated by GidMarket based on the ratio of the volume of the organic fertilizer market in value terms to the total population of India.
The dynamics of changes in the consumption of organic fertilizers in monetary terms tend to increase.
5.2. Analysis of the results of tenders for the purchase
At the end of 2021, contracts were signed for the supply of organic fertilizers in the amount of more than ... million Rs.
Consider the largest contracts for the supply of organic fertilizers in 2021, the total amount of which exceeds Rs 1 million.
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Based on the analysis of information on competitive procedures available in the public domain, the following conclusions can be drawn:
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Part 6. Price Analysis
6.1. Average producer prices by union territories
When analyzing prices, we mainly took into account the data of producers specializing in the supply of organic fertilizers. Large agricultural enterprises engaged in breeding agricultural animals, as a rule, do not distinguish the direction of production of organic fertilizers in the nomenclature (it should be noted that the cost of organic fertilizers of these companies is much lower, since they do not purchase raw materials for the production of fertilizers).
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6.2. Average consumer prices by states in India
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In the organic fertilizer market, there is a spread in consumer prices across the states of India.
Part 7. Assessment of factors of investment attractiveness of the market
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The positive factors of the investment climate of the market dominate over the negative ones.
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The most significant positive factors.
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The most significant negative factors.
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Part 8. Forecast for the development of the organic fertilizer market until 2026
We will analyze the market based on methods based on identifying trends over time, adjusted for expert opinion in the industry.
The agricultural sector is of particular importance in the economy of both regions and the country as a whole. It is one of the main national economic complexes that determine the conditions for maintaining the life of society. A significant role in the development of agriculture in India, among other things, is provided by state regulation of the industry.
Let's consider the general goals and objectives within the framework of existing projects.
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Part 9. Recommendations and conclusions
Organic fertilizers are fertilizers containing plant nutrients mainly in the form of organic compounds. These include manure, composts, peat, straw, green manure, silt (sapropel), complex organic fertilizers, industrial and household waste, etc.
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According to the GidMarket analysis, the Indian organic fertilizer market is currently experiencing a generally negative impact of medium-strength environmental factors.
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Thus, based on the totality of the analysis of these prospects and forecasts, the following is recommended for enterprises already operating in the market:
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Diagrams
Diagram 1. Dynamics of organic fertilizer application for crops in agricultural organizations in India in 2013-2021, million tons.
Diagram 2. The ratio of imported and domestic products in the organic fertilizer market in India in 2016-2021, in physical terms, in %
Diagram 3. Dynamics of the market volume of organic fertilizers, 2017-2021, thousand tons
Diagram 4. Revenue (net) from the sale of organic fertilizers by union territories for 2017-2021, %
Chart 5. Dynamics of India's GDP, 2013-2021, Q2 2022, % to the previous year
Chart 6. Monthly dynamics of the US dollar against the rupee, 2017-2022 (Jan-July), Rs. for 1 US dollar
Diagram 7. Change in the area under crops of the main crop crops in 2021 in relation to 2020, %
Diagram 8. Dynamics of the population of India, as of January 1, 2013-2022, million people, %
Diagram 9. The population forecast for India, for the period 2023-2026, million people
Chart 10. Dynamics of real disposable money income of the population of India, 2014-2021, Q2 2022, % to the previous year
Diagram 11. Dynamics of the number of machines for organic fertilizers in agricultural organizations in 2012-2022 (as of January 1), pieces
Figure 12. Life cycle stage of the organic fertilizer market
Diagram 13. Dynamics of the volume of the mineral fertilizer market, 2017-2021, thousand tons
Diagram 14. Shares of the largest competitors in the organic fertilizer market in 2021, %
Diagram 15. Dynamics of organic fertilizer production in India for 2017-2021, thousand tons
Diagram 16. Dynamics of the total revenue of the largest producers (TOP-5) of organic fertilizers in India, 2017-2021, million Rs.
Diagram 17. The share of exports in production for 2016-2021, %
Diagram 18. Structure of organic fertilizer production by Indian states in 2021, %
Diagram 19. Volume and dynamics of imports of organic fertilizers in physical terms in 2017-2021, thousand tons
Diagram 20. Volume and dynamics of imports of organic fertilizers in monetary terms in 2017-2021, thousand dollars
Diagram 21. Dynamics of exports of organic fertilizers in physical terms in 2017-2021, thousand tons
Diagram 22. Dynamics of exports of organic fertilizers in monetary terms in 2017-2021, thousand dollars
Diagram 23. Balance of exports and imports in the Indian organic fertilizer market in 2017-2021, thousand tons
Chart 24. Structure of exports by countries in 2021 in physical terms, %
Diagram 25. Dynamics of consumption of organic fertilizers in monetary terms, 2017-2021, Rs./person
Diagram 26. Forecast of the market volume of organic fertilizers in 2022-2026, thousand tons
Tables
Table 1. Main types of organic fertilizers and their application
Table 2. Forecasts of various sources and experts on real GDP in India in 2022-2024 (base scenario), %
Table 3. Dynamics of sown areas of agricultural crops in India (farms of all categories), 2017-2021, thousand hectares
Table 4. Dynamics of the number of farm animals in India, 2017-2021, thousand heads
Table 5. STEP analysis of factors affecting the organic fertilizer market
Table 6. Main advantages and disadvantages of organic and mineral fertilizers
Table 7. Main companies participating in the organic fertilizer market in 2021
Table 8. Profiles of companies participating in the organic fertilizer market in 2021
Table 9. Dynamics of organic fertilizer production in India by union territories in 2017-2021, thousand tons
Table 10. Structure of imports of organic fertilizers by importing countries in 2021 in physical terms, units rev.
Table 11. Contracts for tenders for the purchase of organic fertilizers concluded in 2021 in the amount of more than 1 million Rs.
Table 12. Average producer prices in the organic fertilizer market across the Union Territories in 2021, Rs./kg
Table 13. Average consumer prices in the organic fertilizer market by Indian states in 2021, Rs./kg
Table 14. Assessment of factors of investment attractiveness of the organic fertilizer market
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