Workers on a production line of Lam Thao Fertilizers and Chemicals JSC. —Photo phutho.gov.vn |
The fertilizer export market declined in both volume and price in the first six months of this year.
Phung Ha, general secretary and vice chairman of the Vietnam Fertilizer Association, said that the prices of fertilizers fell sharply in the first six months of the year, especially urea fertilizer due to the price of input materials such as gas and coal for production falling.
In addition, China has no longer restricted the export of 29 types of fertilizers. This move has greatly increased the supply of fertilizer on the world market, putting downward pressure on prices to promote consumption.
Accordingly, the prices of all kinds of fertilizers have gone down by 60-65 percent compared to the beginning of last year and tend to be stable at the current low level.
In addition, the demand for fertilizer also declined as it is not the peak season, which also contributed to pushing prices down.
Many Thai and Chinese firms are coming to Cambodia to invest and buy ingredients for agricultural production, said Ngo Van Dong, General Director of Binh Dien Fertilizer Joint Stock Company.
This is a challenge for Vietnamese fertilizer manufacturers in this traditional export market, said Dong.
To cope with these challenges, besides the traditional markets of Japan, South Korea, Malaysia, Cambodia and Laos, many domestic fertilizer manufacturers have sought to expand their exports to other markets such as Taiwan (China), Brazil, India, Southeast Asian countries and Europe.
Along with the efforts of enterprises to expand the market, the Vietnam Fertilizer Association recently sent an official dispatch to the Government Office on solutions to support fertilizer firms in boosting exports through favourable tax policies.
Specifically, the association proposed the superphosphate export tax rate be 0 percent as before, instead of the 5 percent rate as prescribed in Decree No 26/2023/ND-CP dated May 31 this year.
The association said that the total production capacity of superphosphate fertilizers of factories in Vietnam is about 1.5 million tons per year while the amount of the fertilizer consumed domestically is less than 500,000 tons per year.
On the other hand, statistics of the General Department of Customs show that the amount of exported superphosphate is very small, less than 100,000 tons per year in 2022.
With the excess production capacity compared to the domestic demand for superphosphate fertilizer, exports should be encouraged to increase the value of national products, create jobs, earn foreign currency for the country, and grow tax revenue for the locality.
In addition, the fierce competition from Chinese products and cheap prices makes Vietnamese superphosphate products less attractive as exports compared to other countries such as China, Morocco, and India, especially if the export tax rate is kept at 5 percent.
As for urea nitrogen fertilizer, its capacity is 2.5 million tons and demand is less than 1.8 million tons, therefore, enterprises must export to ensure efficiency.
If the export tax is imposed, they will lose business opportunities and production and efficiency will risk being dampened.
Brunei's entry into the fertilizer market with a supply of 1.8 million tons of urea per year, mainly targeting the Southeast Asian market, including Vietnam, has further increase competitive pressure.
The Vietnam Fertilizer Association proposed to apply zero percent export tax on urea fertilizers.