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Influences of Macroeconomic Policy on Fertilizer Market in 2014

China Agriculture Report By CnAgri2014-01-21 09:21:20China Agriculture Report Print

Central Economic Work Conference and the Central Rural Work Conference held in Dec. have special significance on fertilizer market, for the two conferences will arrange economic work and rural work in next year.

What influences will the two conferences have on fertilizer market in 2014?

1. Grain Safety Stabilizes Fertilizer Market

The Central Economic Work Conference this year set “Protecting national grain safety effectively” as the first economic task in 2014, first time in recent years, suggesting highlight on grain safety issue. Rural Work Conference advocated to strictly guarantee1.8 billion mu arable land and current arable land acreages must be maintained. Farmers’ income should be guaranteed and more subsidy should be paid to productive farmers as encouragement, which stabilizes demand for fertilizer. Since fertilizer has close relationship with agriculture, only well agriculture prospect can guarantee healthy development of fertilizer industry. So the more government attaches importance to agriculture and the more subsidy provided to farmers, the better to fertilizer industry.

2. Urbanization and Land Transfer Have Profound Influences on Fertilizer Market

Central Urbanization Work Conference was held from Dec. 12 to Dec. 13 in Beijing, which indicated that urbanization is a must to achieve modernization. And promoting urbanization must take land transfer and agricultural production and management system innovation into consideration. Current market scale of China agricultural materials is 400-500 billion yuan. Traditional wholesaling model cannot meet demand of developing modern agriculture due to such problems as many circulation links and high circulation costs etc.. Land transfer will have a profound impact on fertilizer market. For firstly, intermediate circulations will be significantly reduced and more fertilizer manufacturers will provide service directly to large growers; secondly, it will influence fertilizer varieties. Sales channels of ordinary fertilizer will narrow and functional fertilizer, slow-release fertilizer, soil testing formular fertilizer, organic fertilizer and water soluble fertilizer will be more favored by large growers with such features as strongly-targeted, higher utilization, convenience and environmental protection etc..

3. Good Opportunity for Fertilizer Export

In 2013, fertilizer export policy has loosened greatly and in 2014, it is looser by declining export customs tariff in busy season, allowing fertilizer to be exported in whole year. With strong competitiveness, China fertilizer has advantage in exporting. In 2013, exports of urea and ammonium sulfate saw significant increase, according to Customs statistics, the former totaled 7.513 million MT and the latter 2.717 million MT in Jan.-Nov., 2013, up 42.02% and 37.97% respectively on year-on-year basis, which no doubt both recorded new high. Exports of DAP reached 3.28 million MT in the first eleven months in 2013, though slightly decline, still playing an important role in international DAP trade. The further loose export policy facilitates China fertilizer exports in 2014 and fertilizer export gets a good opportunity. Superior coastal fertilizer enterprises should grasp this opportunity to increase exports so as to alleviate domestic supply pressure.

From “China Fertilizer Market Weekly Report


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