Superphosphate fertilizer - the 'stabilizer' amid 'price storm'

Since the beginning of the year, fertilizer price in the country and the world has constantly increased, far exceeding the predictions of most fertilizer manufacturers and traders. This is really a shocking news to farmers.

In the domestic market, the price of urea increased by over 80%, from VND 6,500 - 6,800/kg to VND 11,500 - 12,000/kg. Other nitrogenous fertilizers such as nitrogen sulfate, ammonium nitrogen, and nitrate nitrogen also increased at a similar rate. Potassium fertilizer, which must be 100% imported by Vietnam, also has its price increased by over 80%.

The price of phosphate-containing fertilizers such as DAP, MAP, TSP... also could not escape the same situation. Domestically produced DAP experienced an increase in price by nearly 80% from VND 8,500/kg to over VND 15,000/kg.  the price of imported DAP doubled, from VND 9,000/kg to VND 18,000/kg.

The reasons behind the “galloping” price increase of fertilizer have been brought out for a thorough analysis. On the world scale, the increased demand for food due to the Covid-19 pandemic has made the prices of agricultural products in constant increase, forcing agricultural production to further develop which leads to an increase in fertilizer demand. This phenomenon goes in line with the sudden increase in the cost for production, transportation and logistics as well as the disrupted supply chain of all raw materials and goods. They are the main reason for the sharp increase in fertilizer prices since the beginning of the year.

In the domestic market, the increase in fertilizer prices is not entirely due to the supply-demand relationship. Prices of agricultural products of all kinds tend to go down because it is difficult to consume since many regions are currently isolated, distanced. The prolonged pandemic has caused a decrease in people's income, which leads to a decrease in domestic purchasing capacity.

According to statistics, there are 841 fertilizer factories in the whole country, with a production capacity of nearly 30 million tons/year, while the demand for use in recent years is only over 10 million tons. Saying that supply can’t meet the demand in this situation might not be too convincing.

The current situation can be explained by the high price of raw materials used for fertilizer production. The price of sulfur has increased by 170%, ammonia has increased by 200%, sulfuric acid has increased by 132%. Moreover, transportation and logistics costs have been pushed up too high and there has not been a reasonable set of policies for fertilizer production and import tax.

The sudden increase in fertilizer price in contrast to the low price of agricultural products has resulted in farmers suffering many hardships because the usage cost of fertilizer in rice production has already accounted for about 25% of the total cost, even up to 30% in the case of fruit and vegetable crops. Uncontrolled fertilizer prices might negatively affect the mental state of farmers reproducing and reinvesting in new crops.

However, amid the chaos of fertilizer prices, there are still notable bright spots. The price of superphosphate fertilizer is still maintained at a relatively stable level. Superphosphate fertilizer products are mostly produced in the country and widely used in localities, especially the Northern and Central provinces. Although the prices of other phosphate-containing fertilizers (DAP, MAP, TSP,...) have increased sharply since the beginning of the year, the price of superphosphate fertilizer has remained relatively stable. It can be said that the price of superphosphate fertilizer is the cheapest on the market at the moment. Consumers when buying superphosphate can secure the sufficient nutritional value of phosphorus for plants at the most reasonable price.

Nonetheless, with increasing pressure due to high prices of key raw materials (apatite ore and sulfuric acid) especially the supply of ore is very scarce, unable to meet the demand of phosphate fertilizer producers, it is very difficult, almost to the point of impossible, to maintain the current superphosphate price.

In fact, due to an increase in the price of apatite ore and sulfuric acid, the price of superphosphate increased accordingly, but only around 10%.

Considering the value of phosphorus nutrient content in correlation with other fertilizers, the price of superphosphate fertilizer should have increased by 80-90%, equivalent to an increase of VND 5,300 - 5,500/kg. Not to mention there is also a large amount of sulfur (11%) and other compounds in superphosphate fertilizer that are essential and useful for plants.

Moreover, the cost of transportation and logistics will continue to increase because the costs related to disease prevention and control will certainly be a double impact on the price of superphosphate fertilizer in the market. This is understandable considering the current fertilizer market situation in the world as well as in Vietnam.

The 2021 autumn-winter season is near. In the current context, farmers and fertilizer manufacturers should be wise when deciding fertilizer products to ensure the most profitable, both ensuring the efficiency of production and business activities and maximizing the potential benefits.

In recent years, thanks to the production stages being implemented more rationally as well as the application of modern technology to maximize the conversion coefficient of P2O5 in apatite ore into superphosphate products, strengthening practical measures in order to lower product costs, domestic factories have made great efforts to maintain the most reasonable superphosphate prices, responding to the Government's call to together help farmers overcome the pandemic.