New rule on fertiliser reserves proposed

The Ministry of Industry and Trade has asked the Government to draw up a regulation that would require producers to maintain a fertiliser reserve to avert supply shortages and price hikes.

At a seminar on Saturday in HCM City, Nguyen Loc An, deputy head of the Ministry of Industry and Trade’s Domestic Market Department, said “the businesses that keep a stockpile of fertiliser would get support from the Government through loans, preferential taxes and investment capital to build warehouses.”

In order to have a stable supply, domestic businesses need hasten construction of fertiliser factories, including Ca Mau urea factory, expansion of the Ha Bac urea factory, the Ninh Binh urea factory, the DAP factory No2 and the Kali production factory in Laos.

An proposed that “the Government should adjust taxes and import-export policies such as an increase of export taxes and cuts in import taxes and temporarily stop exporting some types of fertiliser during a specific period to balance demand and supply in the domestic market.”

The businesses should also improve the efficiency of their direct distribution system to ensure that fertiliser was delivered directly to farmers, he said.

Pham Van Du, deputy head of the Ministry of Agriculture and Rural Development’s Cultivation Department, said the ministry in collaboration with the Ministry of Finance should keep close watch on market information, the supply-demand situation, import prices, and selling prices.

They should ask producers and importers to maintain sufficient supply for domestic agricultural production.

The relevant agencies and local authorities also needed to strengthen inspection and prices to avoid speculation and price volatility, he said.

Du suggested that Viet Nam should promote investment in the domestic fertiliser sector with advanced technology and infrastructure improvement to produce high quality fertiliser.

Nguyen Anh Tuan, deputy head of the Ministry of Finance’s Pricing Department said “balancing supply and demand will be the most important factor to help stabilise domestic fertiliser prices.”

The lack of restrictions on fertiliser speculation, hoarding, unhealthy competition and monopoly alliances have all contributed to the price hike.

He also brought up the increasing problems of counterfeit and low quality fertiliser on the market.

Tuan suggested that State management agencies frequently inspected the fertiliser companies’ registered selling prices.

Many conference participants said the Government should issue a legal framework on management of fertilisers and impose strict punishment for those who violate the law.

At the conference, ministry officials said the causes of the price and supply fluctuation were depending heavily on imports, irregular changes in the weather, and a high exchange rate.

The total demand for fertiliser is currently about 8.9 million tonnes; of that amount, domestic production is 6.2 million tonnes, meeting 68 per cent of demand. The country had to import 2.6 million tonnes, Du said.

Viet Nam still imports nearly 50 per cent of urea fertiliser, 100 per cent of SA and kali fertiliser and 70 per cent of DAP fertiliser.

Phu My urea factory

The Phu My urea factory was put into operation in 2004 by PetroViet Nam Fertiliser and Chemical Product Corporation provides 750,000-800,000 tonnes of urea every year, satisfying 40 per cent of domestic demand.

Cao Hoai Duong, the corp’s general director , said urea demand and supply in the second quarter was forecast to be about 600,000 tonnes and the selling price of urea fertiliser to farmers would be kept stable at VND9, 500-10, 000 per kg.

There was no signs of a price hike on urea fertiliser in the near future.

The company frequently ensures a stockpile of minimum 70,000 tonnes of urea to meet market demand and avoid price hikes caused by supply shortage.

Urea fertiliser is in great demand at all kinds of plants. Demand for urea fertiliser in the Central Highlands, and the Southeast and Cuu Long (Mekong) Delta region is approximately 1.5 million tonnes every year.

Duong said the Ca Mau and Ninh Binh urea production factory projects are expected to put into operation next year.

Until then, the domestic suppliers will cooperate to balance demand-supply and exports. — VNS

Tags: Vietnam fertilizer industry