December 26, 2008

China will adjust its fertiliser imports and exports rules, and improve its subsidy system to guarantee domestic supply and protect farmers'' interests during planting seasons, the State Council said on Thursday (Dec 25).

The government will ensure that fertiliser reserves during non-planting seasons will not fall below 20 percent of the required amount for spring planting, the Cabinet said in a statement.

The government will work to ensure that grain farmers'' profits will not fall due to rising raw material prices, the statement said.

China will also increase potash exploration, and monitor the prices of potash imports, it said.

The government will also control calcium phosphate and nitrogen fertiliser production capacity.

The government will liberalise investment rules for the fertiliser industry, and encourage the formation of large fertiliser companies, it said.

Market-oriented reform and free prices on all fertilisers, except that for imported potash, will be speed up and guided by the government. Beijing will also stop intervening on retail prices, but will continue to offer tax incentives and discounted prices for energy and transport to aid fertiliser producers.

The loosening of controls come as some producers stopped production earlier in the year, threatening supplies from China''s farms after feedstock prices rose faster than fertiliser prices, squeezing their margins, according to the state media.

Concerned that the higher costs will discourage grain farmers from planting, China set ceiling prices on fertilisers. Last month, the government also reduced special tariffs on fertiliser exports to 75 percent from 100-150 percent, effective next year.