Reasons for fertilizer prices increasing not plausible

(VAN) Many localities believe that the reason behind the skyrocketing fertilizer price recently is not convincing.

On August 11th, the Ministry of Agriculture and Rural Development and the Ministry of Industry and Trade held an online conference to discuss solutions on stabilizing fertilizer prices. The conference was chaired by Deputy Minister of Agriculture and Rural Development Le Quoc Doanh and Deputy Minister of Industry and Trade Tran Quoc Khanh

Exports in the first 6 months of the year increased by 44.7%

Mr. Nguyen Van Thanh, Director of the Chemical Department (Ministry of Industry and Trade), state that the domestic supply of fertilizer is higher than the demand. Director of Plant Protection Department Hoang Trung also agreed with this statement because the area of agricultural production this year decreased compared to 2020.

Reports show that the domestic fertilizer supply is still exceeding demand, but the price has sharply increased recently. Photo by: TL. Reports at the conference show that in the first 6 months of 2021, our country's inorganic fertilizer production reached nearly 4.7 million tons, an increase of more than 11% compared to the same period in 2020. Additionally, the amount of fertilizer imported by the end of June 2021 reached 2.31 million tons, an increase of nearly 15%, while the amount of fertilizer exported also increased by 44.7% over the same period in 2020. — Reports show that the domestic fertilizer supply is still exceeding demand, but the price has sharply increased recently. Photo by: TL.

Reports at the conference show that in the first 6 months of 2021, our country's inorganic fertilizer production reached nearly 4.7 million tons, an increase of more than 11% compared to the same period in 2020.

Additionally, the amount of fertilizer imported by the end of June 2021 reached 2.31 million tons, an increase of nearly 15%, while the amount of fertilizer exported also increased by 44.7% over the same period in 2020.

According to the report, the current domestic demand for fertilizer is only about 10 million tons/year. Meanwhile, the total registered capacity of domestic fertilizer factories is nearly 30 million tons,only producing about 14-15 million tons/year, depending on the market's consumption capacity.

That is why, in the first 6 months of 2021, although the export volume increased, the total supply of fertilizer for domestic production was still guaranteed, and higher than consumption demand.

"Because the supply is guaranteed, agricultural production is interrupted anywhere due to lack of fertilizer," said Director of Plant Protection Hoang Trung.

From a local perspective, Mr. Tran Thai Nghiem, Deputy Director of Can Tho Department of Agriculture and Rural Development, said that under the current conditions, high fertilizer prices but a decrease in agricultural product prices affect production and investment psychology of farmers. Therefore, it is recommended that agencies have appropriate policies to stabilize fertilizer prices.

According to Mr. Nghiem, in Can Tho, fertilizer prices have increased by 15-45% (depending on type) since the beginning of the winter-spring crop 2020-2021. "Can Tho Department of Agriculture and Rural Development recommends central agencies to review the fertilizer supply chain, identify bottlenecks, factors for the sharp increase in fertilizer prices in recent years," said Mr. Tran Thai Nghiem.

In the first 6 months, fertilizer imports increased by only 15%, while exports increased by 44.7%. Photo: LHV. — In the first 6 months, fertilizer imports increased by only 15%, while exports increased by 44.7%. Photo: *LHV*.

A representative of An Giang Department of Agriculture and Rural Development state that recent explanations for the recent rapid increase in fertilizer prices are not convincing: For example, the price of urea increased to more than 11,000 VND/kg but there is not enough basis to explain for such an increase. Therefore, it is desirable to clarify the basis for the price increase. An Giang has not seen any cases of stockpiling or supply shortage, but the problem remains questionable.

Many reasons were given to explain the increase in fertilizer prices despite the fact that demand is still lower than supply. In which, the main reason given by the delegates was the sharp increase in the price of fertilizer input materials. Director of the Chemical Department - Nguyen Van Thanh said that prices for materials such as Sulfur, NH3, H2SO4 all increased by more than 100%.

As a further reason, Deputy General Director of Vietnam Chemical Corporation Bui The Chuyen said that in addition to the increase in input material prices, businesses are incurring costs to deal with Covid-19 such as expenses to follow the "3 on-site" regulations.

“It is possible to exclude supply shortage as a factor for the price increase, there are no cases of stockpiling to increase prices.

The short-term explanation for the increase in fertilizer prices is partly due to social distancing measures to prevent Covid-19 causing a local supply shortage, especially in the Mekong Delta region.

(Deputy Minister of Industry and Trade Tran Quoc Khanh)

Preventing stockpiling

Empathizing with farmers, Deputy Minister of Agriculture and Rural Development Le Quoc Doanh emphasized that Covid-19 is having a great impact on the production and consumption of agricultural products in the Mekong Delta. In addition to challenges in circulation, people also face difficulties due to production inputs, including fertilizers.

Prices of many materials, especially fertilizers, has increased dramatically recently, frustrating farmers even further during the Covid-19 pandemic. Photo: LHV. — Prices of many materials, especially fertilizers, has increased dramatically recently, frustrating farmers even further during the Covid-19 pandemic. Photo: *LHV*.

Deputy Minister Le Quoc Doanh noted: Currently, in addition to providing fertilizer for long-term plants, it is necessary to prepare for short-term plants, namely preparing for the northern summer rice crops and the autumn-winter crop in the Mekong Delta, followed by the winter-spring crop - the most important crop of the year with a sowing area of approximately 3 million hectares nationwide.

Deputy Minister of Industry and Trade Tran Quoc Khanh said that fertilizer manufacturers need to rationalize costs: "The goal is that Vietnam's fertilizer always has to be sold at a lower price than the world's fertilizer and exports will be stopped, focusing solely on giving priority to domestic fertilizer", Mr. Khanh emphasized.

Deputy Ministers Le Quoc Doanh and Tran Quoc Khanh also agreed that they would propose to the Government to consider and research to establish a reasonable tax plan that avoids imbalance between imported and domestically produced fertilizers.

The Ministry of Agriculture and Rural Development and the Ministry of Industry and Trade also agreed on a number of immediate solutions such as creating favorable conditions for production and transportation so that there is no shortage of local supply, especially in the upcoming production seasons.

Additionally, functional forces such as the Market Manager will strengthen inspection and supervision to prevent stockpiling, price increasing and anti-counterfeiting.

Author: Tung Dinh. Translated by Nguyen Hai Long.