09 Nov 2012

High commercial fertilizer prices and user’s strategy in China

Since May 2011, the commercial fertilizer prices increased quickly (30%-50%) in China (see the table). This quick increase will greatly affects the use of commercial fertilizer in the country. It was reported that the main reasons of fertilizer prices increase include: 1) cost of raw materials increased. For example, coal increased 20-40%, sulphur increased 50%, phosphate rock increased 40-65%. 2) Commercial fertilizer prices in international market increased greatly. 3) Energy price and CPI index in China increased. For example, the CPI index of July increased 6.5% compare with July of last year. 4) Market adjustment. In last few years, the commercial fertilizer production was higher than consumption in China, so the manufactures have to reduce fertilizer prices to occupy domestic market. It resulted in a number of small fertilizer enterprises exited. Therefore, the production comes down in this year. So, the prices increase recruited the low price in last year more or less for some fertilizer producers. In general, with limited natural resources in the world, the prices of commercial fertilizers will increase continuously in future. Commercial fertilizer has run into the age of high cost.

To reduce the negative effect of price increase in China, we suggest that: 1) increase efficiency of fertilizer manufacture and reduce the cost of product sale by enterprises. 2) Reduce commercial fertilizer export from domestic market to international market. 3) Encourage farmers to use various organic fertilizer resources. 4) Increase fertilization efficiency by balanced fertilization and use slow and controlled release fertilizers. 5) Buy commercial fertilizers in group (get wholesale price) and earlier season.

Table Compare of fertilizer prices between 2010 and 2011 (1US$ = 6.34 CN)

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