Fertiliser prices rising fast

Since early March fertiliser prices have kept rising and businesses put this down to a scarce supply and price hikes on the world market.

According to the Vietnam Fertiliser Association (VFA), the prices of all kinds of fertilisers are now much higher than in early this year. For example, DAP costs US$120 per tonne, urea US$25 per tonne, ammonia US$125 per tonne and sulphur US$120 per tonne. The VFA says that the price hikes are due to limited supplies in the US, north Africa and Russia, and a shortage of reserves. There is also a increasing demand in India (up 30 percent), the US (up 20-25 percent) and Pakistan (up 12-15 percent). Together counting the country’s reserves, imports and domestic production will be just enough for the forthcoming summer-autumn crop.

Nguyen Hac Thuy, the VFA’s president, says that the association has asked its member businesses to recalculate plans for raising prices.

In fact, most farmers do not want to buy fertiliser due to severe weather conditions and rising prices. Many fertiliser producers and traders say that the price of fertiliser will continue to go up as input costs are higher.

Tran Van Muoi, general director of the Nam Sao Fertiliser Joint Stock Company in Ho Chi Minh City says that if business can forecast the market movements it can balance prices. He adds that despite the price soaring of input materials, his company has stockpiled materials over the last 4-5 months, which will reduce production and transport costs to control prices.

Meanwhile Vietnamese fertiliser businesses are not cooperating well with each other and often fail to compete with foreign partners. To iron out this snag, it is high time for domestic businesses to restructure their distribution network to reduce costs.

Pham Van Tuan, CEO of the Can Tho Joint Stock Company says that his company has expanded its distribution network to rural areas to supply products to farmers. Businesses should import fertiliser before the beginning of the crop to reduce bank loan rates and storage costs.

No reason for raising prices

While businesses proposed to raise their prices, the Ministry of Industry and Trade (MOIT) confirmed that there is no reason for a hike in fertiliser prices, which will have a negative impact on farmers. The MOIT says that the fertiliser price on the world market began to fall in the middle of March and will drop further. It says that it is unreasonable for fertiliser businesses to raise their prices.

The Ministry of Finance (MoF) has announced its findings after conducting an investigation on steel, sugar, fertiliser and gas. Fertiliser prices rose in 2009 and continued to increase by 2-6 percent in early 2010.

The pre-tax profit of many fertiliser businesses is as high as 22-45 percent. The MoF said that many businesses earned high profits in 2009, such as the Petroleum Chemicals and Fertiliser Company (VND1,519 billion), the Ha Bac Fertiliser and Chemicals Company (VND519.6 billion), the Binh Dien Fertiliser Company (VND35.5 billion), the Southern Fertilizer Company (VND51.5 billion), and the Lam Thao Chemicals and Sulphur Company (VND99.1 billion). This is why domestic production businesses should stabilise or reduce their prices in 2010 to share the economic difficulties with farmers.

Tags: Vietnam fertilizer, Vietnam fertilizer prices