The fertilizer distribution system has been characterized by a rapid increase in the number of licenses, as a result of increased incentives and less rigid licensing requirements for fertilizer dealers, wholesales, and retailers. Even though the mark-up over cost is still rather small, and the price differentials between the private and public sector prices and between regions tend to disappear, the margins between purchase and sale prices of both large distributors and merchants are increasing, perhaps the signal of an emerging concentrated market structure. The effect on crop production has been positive in most cases, with increases in production and yields. Higher nominal prices of fertilizers and pesticides did not translate into higher real prices. There is some evidence that the ratio between foodgrain prices and the prices of fertilizers, pesticides, and labor have gone up, pointing indirectly to some evidence concerning improvement in average farmer's income, to the extent that changes in the cost of other inputs like land and equipment do not exceed these gains.
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