Fertilizer: Marketization Should Be Progressive

Although the marketization reform of the fertilizer industry in China has already been put on the agenda of the competent authorities, the relevant departments have already issued drafts for drafting opinions. However, it is still unclear what kind of impact the reform will have on fertilizer production and agricultural production. The scheme has not been introduced yet. At present, the more accepted plan is: to cancel the preferential policies for fertilizer production in stages, that is, to cancel the natural gas concession first, then cancel the electricity and transportation concessions, and then cancel the VAT concessions, and implement direct subsidies for farmers to grow grain.

In this regard, industry experts analyzed that the implementation of this plan may have the following effects on fertilizer production, agricultural production, and farmers' income: First, it will lead to increased production costs of fertilizers, and some companies will not be able to bear the increased costs, which will affect the market supply capacity. Second, under the conditions of a market economy, affected by factors such as the international market and raw material market, there may be uncontrollable fluctuations in the supply and prices of fertilizers. Third, farmers’ production expenditures will increase, which will affect food production and reduce farmers’ income.

Experts believe that although China's chemical fertilizer industry is gradually moving toward market-based regulation and supplemented by policy control, it should retain certain supportive policies. Raw material concessions, currently dominated by natural gas concessions and preferential tariffs for small and medium-sized fertilizer companies, coal concessions basically do not exist; transport concessions, only fertilizer products are currently enjoying preferential treatment, raw materials are basically without concessions; tax incentives, nitrogen fertilizers are exempt from VAT, and compound fertilizers are produced The use of duty-free raw materials accounted for more than 70% of the time the product is exempt from tax, but in practice, compound fertilizer production seldom enjoys this policy; in-quota imports of fertilizers after the introduction of value-added tax return, discount off-season reserves, equivalent to one ton of fertilizer 50 yuan interest subsidy. It can be seen that although the preferential policies for the fertilizer industry cover a wide range, there are great differences in the implementation of each policy in different fertilizer products and production enterprises. Overall, although China's fertilizer industry's preferential policies have gradually decreased along with the development of the market economy, it still reaches about 40 billion yuan, and the magnitude of the impact is VAT, electricity prices, railway freight rates, and planned natural gas prices. Although the impact of policy reforms on the fertilizer industry can be adjusted through technological advancement and industrial restructuring, the increase in chemical fertilizer costs and ex-factory prices is inevitable. The increase in the price of fertilizers in the market will inevitably affect downstream consumers, that is, the majority of farmers. Farmers will choose to buy less fertilizer or simply choose to abandon their grain production, which will seriously threaten national food security.

The adjustment of fertilizer production preferences will have a complicated impact on the industry. With the increase in adjustments, market prices will inevitably rise, and the industrial structure and product mix will change greatly. To this end, experts suggest that: The market reform of the fertilizer industry is a general trend, but it must have a transition period of 3 to 5 years to build a gradual adaptation and adjustment process for fertilizer companies and agricultural capital markets. This process is very necessary. of.

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