The National Development and Reform Commission (NDRC), China's
top economic planner, has announced on Tuesday that it will extend
a price control policy to fertilizer, a move to protect the
enthusiasm of farmers and the country's food security.
A senior official with NDRC made the announcement at a warning
conference on price control of fertilizer.
He said that fertilizer makers run by the central government
should not raise the ex-factory prices of urea while fertilizer
manufacturers run by local governments should strictly control
their ex-factory prices of urea, phosphate fertilizer as well as
compound fertilizer. And other companies were required to submit a
report for official approval when they intended to raise
prices.
The interim price intervention covers the spring plowing
period.
According to the government's policy, the price and market
regulation agencies have the right to ask the enterprises to return
the prices to normal or reduce the price rise range if the rise is
considered unacceptably large.
The forecast for continuous price rises was prevailing before
the government extends price intervention to fertilizer.
Statistics show the ex-factory prices of urea and compound
fertilizer have surged to 1,725 yuan/ton (US$238.6/ton) and 2,600
yuan/ton(US$359.6/ton), respectively, both up more than 30 percent
year-on-year.
Analysts attributed the price rises in fertilizer to
international price interaction, cost increase and China's lack of
phosphorus and potassium resources. The offshore price of urea in
the Black Sea has reached US$400/ton, up 30 percent over the
previous year. And the ex-factory price of monoammonium phosphate
(MAP), which is the main raw material to produce fertilizer, has
climbed to 3,100 yuan/ton from 1,800 yuan/ton early last year in
China.
"Farmers are expected to suffer more from costs increase if the
fertilizer prices continue to soar when the plowing season is
approaching," Li Xianbin, deputy president and spokesman of China's
Agricultural Means of Production Group, said earlier this
month.
Xu Shaohua, a villager living in a town off the Dongting Lake
in?Central China's Hunan Province, was carefully calculating
whether he could continue to live on farming.
"The price of urea grew by almost a half last year while the
grain price rose a little. The rice has been sold at about 1.6
yuan/kilogram in recent years. The margins are really tight," said
Xu.
Last year, numerous preferential policies have been taken by the
Chinese government to increase the income and improve the
livelihood of rural residents.
About 150 million rural students have been exempted from tuition
fees in nine-year compulsory education and more than 200 million
rural residents are entitled to an allowance for living, which is
provided by the central and local governments.
But experts noted the government is to some extent in a dilemma
- on the one hand it has to curb the prices of agricultural
products to tackle inflation, on the other hand it must introduce
measures to stimulate the farmers' enthusiasm.
Surges in prices of edible oil, meat, milk, eggs and liquefied
petroleum lifted the consumer price index (CPI) to 4.6 percent in
the first 11 months of 2007, and an 11-year high of 6.9 percent in
November, well above the government's three-percent target.
Fertilizer is one of the most important means of production for
farming, so the surge in the prices of fertilizer touches the most
sensitive nerve of farmers.
"We hope that the fertilizer price will not continue to rise.
Otherwise, it will offset all the income. It is good news that the
government will introduce price controls," said Lu Guangchun, a
farmer in the city of Changyi in East China's Shandong
Province.
(Xinhua News Agency January 23, 2008)
