Fertilizer industry get rid of the policy "Crutch"

As the marketization process accelerates, the fertilizer preferential policies will also change. In recent years, the fertilizer industry has developed rapidly. "Overcapacity" has gradually replaced "supply" and has become the main theme of the fertilizer market. Faced with the new situation, we will reposition the product attributes of chemical fertilizers and gradually accelerate the market-oriented reform of the fertilizer industry by reducing the preferential space compared with other products.

Marketization, Promotion of Fertilizer Preferential Policy Reform

The pace of marketization begins with fertilizer prices. In July 2005, the National Development and Reform Commission promulgated the "Program for Reforming and Perfecting the Regulatory Mechanism of Chemical Fertilizer Prices (Draft)" to make it clear that it is necessary to adhere to the market-oriented reform orientation and fully release fertilizer prices. At the end of 2008, the executive meeting of the State Council researched and determined the “six changes of chemical fertilizer reform countries” and established a market-oriented fertilizer price formation mechanism as the direction of reform.

While the price of chemical fertilizers is being marketed, the country still retains many preferential policies to ensure the stability of the development of the fertilizer industry. The fertilizer industry enjoys more preferential policies, such as preferential electricity prices, preferential natural gas prices, limited coal price limits, fertilizer transportation price concessions, and direct subsidies for fertilizer products, which reduce the production and sales costs of fertilizer companies to varying degrees. Since 2009, the state has promoted the rapid development of the fertilizer production and distribution industry through a series of measures including import and export control, off-season reserves, comprehensive subsidies for agricultural resources, and raising the minimum purchase price of grain.

However, with the gradual improvement of China's economic level, natural gas, electricity, transportation and other fertilizers can enjoy preferential industries, and are also accelerating the process of marketization. In particular, the convening of the Third Plenary Session of the 18th CPC Central Committee has determined the direction of market-oriented reforms, and various industries and trades have fully regulated and controlled the market. At the same time, the chemical fertilizer industry has developed rapidly in recent years, and “overcapacity” has gradually replaced “supply beyond supply” and has become the main theme of the fertilizer market. Faced with the new situation, we will reposition the product attributes of chemical fertilizers and gradually accelerate the market-oriented reform of the fertilizer industry by reducing the preferential space compared with other products.

Fertilizer companies take a positive view of the increase in costs

When investigating how enterprises viewed the company's fertilizer preferential policies, the reporter found that due to the continuous increase in the prices of electricity, natural gas, and freight in recent years, and the obvious trend of preferential cancellation, most chemical fertilizer companies’ response to this kind of cost increase has been dull. More Land is an objective understanding of the impact of market-oriented reforms on the fertilizer market.

Some companies have seen the rationalization of marketization when analyzing this phenomenon. According to Li Yufeng, Minister of Strategic Development of Jiangsu Chemical Industry Co., Ltd., “For the past ten years, fertilizer preferential policies have indeed made many fertilizer companies stronger. However, with the rapid development of the fertilizer industry and the current overcapacity, there is no need for the country to Production provides abundant preferential conditions, and the marketization trend of the fertilizer industry is certain.From the perspective of output value, the fertilizer industry is only a very small branch in the industry, and too many preferential policies make fertilizers become a deformed chain on the market. For example, 20% of urea production is used in industry, and downstream industrial products do not receive input tax when purchasing urea, and only output tax, so it brings unfair policy. Only considering fertilizer products from the perspective of agriculture will cut off the industrial products. With the growing strength of the market's hands, the government's ability to adjust its physical means will naturally become smaller and smaller."

Cancellation of preferential policies has already played a significant role in marketization. According to the reporter’s understanding, under the preferential policies for railway transportation, many companies complained about “unfair treatment”. It is because of the preferential policies for fertilizer transportation that the railway departments in some regions have chosen to ship other goods as a priority, resulting in the untimely shipment of fertilizer products and a backlog of inventory. A representative of a potash fertilizer company in Qinghai reported to reporters that since the number of wagons entering Qinghai has been small in previous years, Qinghai potash companies often “grab” less than wagons, thus limiting the sales of domestic potash in the market, and the railway after restructuring. After the increase of the freight rate, the head office increased the enthusiasm of the railway sector for shipping to Qinghai, and at the same time provided convenience for Qinghai's outward shipment. Zhu Bin, the deputy general manager of Qinghai Lianyu Potash Fertilizer Co., Ltd., told reporters that as the number of wagons entering Tibet has increased, Qinghai has also increased the supply of wagons in Qinghai. However, for the impact of the cancellation of preferential policies, Zhu Bin admits that the production and transportation costs of enterprises have actually increased, and it is bound to be reflected in the increase in the sales price of products. But now the market decides everything. If the prices of chemical fertilizers are high and transactions are positive, companies are not Excessive consideration will be given to the cost pressure brought about by the cancellation of preferential policies.