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Fertiliser prices spin out of control to $230 a tonne

With fertiliser prices rising sharply, government agencies are seeking measures to stabilise prices to ensure continued agricultural production, said Deputy Minister of Trade Phan The Rue.

Speaking at a national conference on the fertiliser market held in HCM City on Wednesday, Rue said the country needs 7 million tonnes of fertiliser a year.

But the market can only supply 54 per cent of the demand and the rest must come from imports, he said.

The Viet Nam Fertiliser Association said the price has hit a record high since early July, hurting enterprises and crop production.

The price over the first half of this year rose by 30 per cent to US$230 a tonne, giving rise to the record price of VND4,000 for a kilo of urea fertiliser, compared with VND3,000 level last year.

Trade officials blamed the hike on global price fluctuations, poor local market management and inefficient distribution of materials to local farmers.

Most fertiliser businesses have hesitated to buy imports, aware that the Phu My Fertiliser Factory in the southern province of Ba Ria-Vung Tau will soon open and supply 60,000 tonnes a month.

They fear the local supply of fertiliser could lower prices and as a result, they may incur losses.

Local farmers now need 1 million tonnes of fertiliser for the coming winter-spring crop, but the the country’s stockpile amounts to only 200,000 tonnes.

Rue said the Government needs to re-organise distribution networks at the municipal and provincial levels and monitor sales agents to curb speculation and the sale of low-quality fertilisers.

Nguyen Quang Tuan, representative of the Viet Nam Chemicals Corporation, said the Government should issue incentives on tax, capital and machine imports to encourage domestic and foreign investors to engage in fertiliser production.

The corporation, he said, is now planning to build a fertiliser factory in the northern province of Hai Phong, with an annual capacity of 350,000 tonnes, to ease the shortage and less dependency on imports.

The association has also suggested the Government reduce value-added taxes (VAT) on fertiliser imports from 5 per cent to zero per cent and extend enterprises’ tax payments so they can recover more capital to import fertiliser.

VNS - (02/08/2004)

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