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Why hasn't the export stopped when the domestic fertiliser price has increased?

Summary

From the beginning of the year, fertiliser prices have been increasing, which has increased input costs, greatly affecting agricultural production. While many have suggested that the export of fertilisers should be considered soon to pause to give priority to the domestic market, the Ministry of Industry and Trade has said that there was not enough basis to do that.

Updated on : 10-09-2021

Priority should be given to domestic production

 

For the story of high fertiliser prices, Mr. Hoang Trung, Director of the Plant Protection Department (MARD) analysed that the Vietnam's economy has a large openness, fertiliser prices had increased sharply since the beginning of the year due to the impact of the world fertiliser market. In the context of the complex development of the Covid-19 pandemic, the price of input materials for fertiliser production has increased sharply. There are types such as ammonia and sulfur up to 50-120% from the same period last year.

In the first six months of 2021, fertiliser prices, especially, DAP and urea fertiliser prices have increased quite high. According to World Bank data, the price of DAP fertiliser had increased by 54% in April 2021 compared to September 2020. In Vietnam, in the first quarter of 2021, the selling price of domestic fertiliser products was still maintained at a lower level than the world price. However, from the beginning of April 2021 until now, the fertiliser price level in Vietnam has also increased under the rules of the world market. Notably, according to statistics of the Fertiliser Association of Vietnam (FAV), the price of raw materials for fertiliser production and the world price of fertilisers for the production of synthetic fertilisers increased sharply in June 2021 compared to the December 2020. Specifically, urea nitrogen increased by 62%, DAP increased by more than 54%, Potassium increased by 45%.

“Besides, the Covid-19 pandemic has disrupted logistics in many stages, increased costs and increased transportation freight by 3-5 times, causing fertiliser prices to rise. In addition, it is not excluded that the distribution of fertilisers is still inadequate, creating temporary scarcity in some places,” said Hoang Trung.

At a recent meeting of the Plant Protection Bureau with fertiliser enterprises such as Phu My Fertiliser, Ca Mau Fertiliser and large enterprises of Vietnam Chemical Group, these enterprises said that they had increased fertiliser production output in the first 6 months of the year, especially some fertilisers with an increase of 15-30%.

In the context, many opinions say that priority should be given to goods for domestic consumption, and price stabilisation for farmers is essential.

“It is necessary to have policies to limit fertiliser exports such as suspending exports, increasing export taxes and increasing supply resources by temporarily suspending the imposition of safeguard duties on fertilisers that Vietnam has not produced yet enough such as DAP, MAP” Dr. Vo Mai, Vice President of the Vietnam Horticultural Association, said.

Phung Ha, Vice President and General Secretary of the Vietnam Fertiliser Association, said that in order to harmonise the interests of producers and farmers in the context of continuously increasing fertiliser prices, it was advisable to consider suspending exports soon fertiliser, and at the same time it was necessary to require manufacturing enterprises to maximise production capacity to ensure domestic supply. In addition, the flexible use of tax rate tools such as import tax reduction, export tax increase, specific calculation and transparency of trade remedy tax would be an effective solution to "be down" fertiliser prices.

Not enough foundation to suspend exports

According to the Bureau of Chemicals (Ministry of Industry and Trade), in the first six months of this year, Vietnam imported about 2.3 million tonnes of fertiliser, up 15% over the same period in 2020; Exported about 667,000 tonnes of fertiliser, up 44.7% over the same period last year. Although the export volume increased in the first 6 months of the year, the total supply from domestic production and import reached over 6.6 million tonnes. After deducting the amount of fertiliser exported, the amount of fertiliser still basically met the domestic demand, so there was not enough foundation to suspend fertiliser export.

Nguyen Van Thanh, Director of the Bureau of Chemicals analyzed taht the production capacity of domestic fertiliser factories was over 8 million tonnes, import was about 4 million tonnes, basically meeting the consumption demand of about 11 million tonnes. Vietnam was also basically self-sufficient in fertilisers with urea, phosphorus and NPK fertilisers; met about 86% of DAP and MAP needs; only import SA and potassium fertilisers because there are no raw materials in the country.

“There was a time when fertiliser demand increased suddenly, so there was a temporary shortage of supply. However, farmers should not be worried, not buy fertiliser to store, pushing up fertiliser prices higher; should use fertiliser more economically and effectively,” Thanh said.

To stabilise the market, in the future, the Ministry of Industry and Trade will continue to work with the Ministry of Agriculture and Rural Development and related units to assess and review safeguard measures for DAP and MAP fertilisers in an objective and overall way in accordance with the provisions of the law.

“The Ministry of Industry and Trade will also direct the market management force to strengthen inspection, avoid speculation, hoarding, and increase prices, and at the same time suggest enterprises to step up production, prioritise domestic consumption and restrict exports in order to stabilise fertiliser prices in the domestic market,” the leader of the Chemical Bureau emphasised.