Domestic fertilizer price is due to world market rules

World fertilizer price beyond all forecasts

Besides, due to the increase of demand and the decrease in the supply, the price of input materials for production and freight cost escalated amidst the Covid-19 pandemic, which has disrupted the global logistics chain, are also factors that contribute to uplift fertilizer prices. 

Vice President, General Secretary of the Vietnam Fertilizer Association Phung Ha said that the Vietnamese economy is currently one of the types with a very high openness when our country has joined most of the free trade agreements and preferential tariffs in the world.

Therefore, any fluctuations in the world market immediately have a direct impact on Vietnam's commodity market. On the contrary, if the price in the world market falls, the domestic market will also decrease, as the previous situation in the fertilizer market. This is the movement and regulation following the rules of the market.

Ha also said that in the first six months of this year, the price of fertilizers, DAP, and urea, in particular, has climbed steadily. According to World Bank, the DAP costs in April increased by 54% against that of last year's December due to the growth of material prices. 

Prices of fertilizer products in Q1 in Vietnam remained low compared to that of the world, as a result, the amount of export urea was high. However, since early April, because the low-priced inventory has been exhausted, the fertilizer price in Vietnam has also been adjusted up according to the general price in the world market.

The main reason for the high increase in fertilizer prices in Vietnam in the first 6 months of 2021 comes from the sharp increase in the price of fertilizer raw materials in the world, even for some products that have increased by times such as sulfuric acid H2SO4, raw materials for fertilizer production...

At the regular briefing of the Ministry of Industry and Trade on June 17, the Director of the Trade Remedies Authority of Vietnam Le Trieu Dung said that fertilizer prices increased largely due to external factors including the fertilizer production materials and transportation costs. Those are the main reasons why the prices of fertilizers such as urea and potassium have also increased, not just fertilizers subject to safeguard taxes like DAP or MAP.

In addition, the Ministry of Industry and Trade also found that when domestic production was balanced against imports, the increase in MAP and DAP prices due to domestic production is much lower than that of imports. 

Dung said that acquiring a domestic production source was a factor to restrain the increase of general prices of DAP, MAP in particular as well as fertilizer in general. In the coming time, the ministry will continue to closely coordinate with the MARD to closely monitor the situation and recommend solutions in line with market developments.

Agricultural production is well remain

According to the leader of DAP Vinachem Joint Stock Company (DAP Dinh Vu), in the first 6 months of 2021, DAP Dinh Vu has doubled its maximum capacity compared to the same period in 2020, estimated at 141,600 tons (71,540 tons in the first 6 months of 2020) to offset the domestic market.

Deputy Director of the Chemical Department Luu Hoang Ngoc also said that at present, China is also expected to impose a 30% tax on fertilizer export from July 1 to tighten the export of fertilizers to foreign countries when domestic demand is high. Besides, the supply of urea from Southeast Asia is very low due to the maintenance period, machinery maintenance has pushed the price of urea on the world market to a very high level. This also puts pressure on domestic urea prices.

Hoang Trung Director-General Plant Protection Department, the current increase in domestic fertilizer prices is objective under market rules due to the sharp increase in world prices. Not only fertilizer, but almost all agricultural materials, from fertilizers to pesticides, raw materials for animal feed, etc. have increased. In addition, the price of input materials for fertilizer products such as chemicals, oil and gas, and freight costs have also increased many times, also contributing to a sharp increase in fertilizer prices.

However, to maintain stable domestic production and reduce the negative effects of price increases on agricultural production, the MARD had a working session with large fertilizer producers to recommend a limit on agricultural production to minimize export, maximize machine capacity, adjust priority product distribution channels to notable regions first.

Trung emphasized that although the increase of fertilizer prices has an impact on agricultural production, it does not lead to stagnation or a halt in production. 

In one way or another, farmers are still able to provide enough nutrients for crops. The Plant Protection Department has made recommendations and instructions for farmers to use fertilizers sparingly, and to increase the use of organic fertilizer products to reduce pressure on inorganic fertilizers.