Call for end to price fixing of fertilisers
Thai fertiliser and agricultural supply operators have called on the government to end its domestic fertiliser price fixing because they are being crushed by rising production costs and a recent Russian ban on fertiliser exports.
Plengsakdi Prakaspesat, president of the Thai Fertilizer and Agricultural Supplies Association, said local fertiliser traders and producers have faced rising production costs since the end of last year, but have been unable to raise their prices accordingly because the government has fixed domestic fertiliser prices, asking for cooperation from producers and traders to maintain their sales prices to alleviate the impact on farmers.
"The domestic fertiliser market has reached a critical point after Russia, the world's biggest exporter of fertilisers, last week recommended the country's fertiliser producers temporarily halt exports. This is a sign the sanctions imposed after Russia's invasion of Ukraine could have a global impact," said Mr Plengsakdi.
"This will increase production costs to the industry on top of higher oil and natural gas prices as well as relatively high freight rates."
Russia is a major producer of potash, phosphate and nitrogen-containing fertilisers, which are major crop and soil nutrients. It produces more than 50 million tonnes of fertiliser a year, around 25% of the world's production.
Thailand imported 500,000 tonnes of fertiliser from Russia last year, using a port in Ukraine.
Each year, Thailand imports a total of 5 million tonnes of fertiliser, mainly from the Middle East, Belarus, Russia, Canada, China and Europe.
In addition, China suspended fertiliser exports because the Chinese government wants to promote and increase domestic agricultural production.
Thailand's demand for fertiliser is about 5 million tonnes a year, but the country is capable of producing only 8% of total domestic demand.
Mr Plengsakdi said Russia's ban on fertiliser exports would hit global fertiliser production, with importers scrambling to buy more, which may cause future shortages.
"Domestic producers and importers would like to ask the government to lift the price-fixing policy on fertiliser because they may eventually close their businesses if they can't tolerate the sharp rise in production costs," he said.
The association is scheduled to submit the letter to the commerce minister today to ask him to review the price-fixing policy and permit entrepreneurs to raise fertiliser prices in line with higher production costs.
Current domestic fertiliser prices have risen more than 100% from the same period last year, driven by rising production costs.
The price of muriate of potash has risen to US$625 per tonne, from $550 per tonne in the same period last year; the cost of diammonium phosphate has risen to $877 per tonne, up from $600 per tonne; and the price of ammonium sulphate has risen to $390 a tonne, up from $220 a tonne year-on-year.