Exports should be suspended to "cool down" fertilizer prices

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Fertilizer exports have continuously soared in 2021 and early 2022. Photo: Internet

Fertilizer prices triple in the first three months

As the conflict rages, the urea price has risen in the global market by 25%. In the first half of March 2022, domestic fertilizer prices have grown by VND300-700/kg depending on the type and this is the third price increase since the beginning of the year.

Vice President and General Secretary of the Vietnam Fertilizer Association said the surge in domestic fertilizer prices was mainly due to the impact of the global fertilizer market; in which the rising oil price has contributed to price hikes in raw materials for fertilizer production.

Notably, Russia and China – two large exporters of fertilizers in the world – have decided to restrict the export of chemical fertilizers to prevent shortages in the domestic market, driving up fertilizer prices.

Specifically, China has controlled the export of 29 fertilizers since October 15, 2021. Meanwhile, on November 17, 2021, Russia restricted the export of nitrogenous fertilizers and nitrogen-containing synthetic fertilizers for six months to curb price increases amid soaring gas prices.

“It is forecast that fertilizer prices will continue to go up when the conflict between Russia and Ukraine shows no sign of stopping. Russia plays an important role in the total fertilizer supply worldwide and over 70% of the input materials for fertilizer production in Europe. Therefore, the conflict between Russia and Ukraine is having a significant impact on world fertilizer prices," said Mr. Phung Ha.

He said currently 100% potash fertilizer (MOP) in Vietnam is imported. In the near future, potash fertilizer from Russia and Belarus will temporarily not be available in Vietnam; instead, potassium from Canada and Israel, while Russia and Belarus account for more than 40% of Vietnam's imported potash fertilizer.

It is predicted that the price of potash fertilizer will increase due to concerns that the potash fertilizer supply will be restricted in the world market due to Western sanctions against Russia and Belarus as well as the Russia–Ukraine tensions.

While domestic fertilizer prices are increasing, it is noteworthy that Vietnam has continuously exported fertilizers.

Statistics from the General Department of Customs show that, in 2021, Vietnam exported over 1.35 million tons of fertilizers, earning US$559.35 million, up 16.4% in volume and 64.2% in value from 2020.

In the first two months of 2022, the country's fertilizer exports soared 69.9% year-on-year in volume and up to 280.6% in value, equivalent to 352,672 tons and nearly US$241.68 million respectively. The average export price reached US$685.3, up 124% over the same period last year.

It is necessary to suspend fertilizer exports

In addition to the influence of the Russia-Ukraine conflict, according to Vu Duy Hai, General Director of Vinacam Group Joint Stock Company, the reason for the high domestic fertilizer price also comes from the supply-demand gap in the domestic market.

He said: "Amid the soaring world prices, especially after China and Russia restricted fertilizer exports, many Vietnamese enterprises have taken advantage of this opportunity to export fertilizers. This leads to a lack of domestic supply. At that time, enterprises have raised selling prices.”

In order to "cool down" fertilizer prices, Vu Duy Hai said the Government needs to temporarily stop exports. This solution is feasible when currently nearly 100% of the export fertilizer market share is managed by State-owned enterprises.

Similarly, Mr. Phung Ha also said amid the Russia - Ukraine tensions and high world fertilizer prices, it is necessary to introduce a solution to suspend fertilizer exports to stabilize domestic production psychology.

In addition, he recommended that enterprises should actively seek alternative supplies to replace the Russian and Belarusian markets, especially for potash fertilizers. Along with that, farmers need to strengthen measures to use fertilizers more economically and reasonably.

According to Mr. Vu Thang, Deputy Head of the Fertilizer Management Division, Department of Plant Protection (MARD), farmers are currently facing many difficulties because of high fertilizer prices and costs from 2021.

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In order to reduce costs, farmers should use organic fertilizers to partially replace inorganic fertilizers. They should self-produce and use organic fertilizers from available raw materials such as crop by-products, livestock waste and domestic waste. Furthermore, the agricultural sector of the provinces and cities should strengthen guiding people to economically and effectively use fertilizers and promote the production and use of organic fertilizers.