Russia-Ukraine conflict forces Vietnam to look for alternative fertiliser suppliers

The Russia–Ukraine conflict is forcing Vietnam to look for alternative suppliers of fertilisers to cope with the shortage of supply and rising prices.
Russia-Ukraine conflict forces Vietnam to look for alternative fertiliser suppliers ảnh 1Fertilisers produced at Bình Điền Fertiliser Joint Stock Company. Domestic fertiliser prices set a new high in the past 50 years. (Photo: VNA) 
Hanoi (VNS/VNA) - The Russia–Ukraine conflict is forcing Vietnam to look for alternative suppliers of fertilisers to cope with the shortage of supply and rising prices.

According to the Ministry of Agriculture and Rural Development (MARD), the Russia–Ukraine conflict is badly affecting the fertiliser market, which had already been suffering supply shortage and price increase from the prolonged COVID-19 pandemic as the supply chain was disrupted.

Russia was one of the world’s major low-cost fertiliser exporters, ranking first in urea, NPK, among nitrate export, third in potash and fourth in phosphate.

Late last week, Russia’s trade and industry ministry recommended that the country’s fertiliser producers temporarily halt exports in a move that threatened to shock the global market.

China, a significant fertiliser exporter, tightened the export of 29 types of plant nutrition from mid-October last year to cope with the domestic shortage.

Domestic fertiliser prices set a new high in the past 50 years. According to the ministry, fertiliser prices rose by more than 20 percent in recent months. The soaring prices of oil and gas, which accounted for a significant part of production cost, also pushed up fertiliser prices.

The storm of fertiliser prices was forecast to continue when these export restrictions were still in place, causing a severe shortage of fertilisers, including potash and DAP.

Vinacam Group Joint Stock Company, one of Vietnam’s leading fertiliser importers, said that quotations of urea at 540-560 USD per tonne were all cancelled. Suppliers from Egypt increased quotation prices by 140 USD to 730 USD per tonne.

This meant that in the short term, urea might climb to around 800-1,000 USD per tonne in April if the oil price reaches 150 USD per barrel. DAP was forecast to reach 950 USD per tonne in April and hit 1,200-1,500 USD soon.

Vinacam predicted that the domestic market would see a severe shortage of DAP in the second quarter, and its price could soar to 25 million VND per tonne. Urea could return to the record of 18 million VND per tonne set in 2021.

For potash, Vietnam relied entirely on imports. Vinacam said that potash price might soon hit 15-20 million VND per tonne and set a new high of around 24-25 million VND.

The skyrocketing prices of fertilisers are pushing farmers into a cost crisis, threatening to push up food prices. Fertilisers accounted for around 40-60 percent of the input cost of agricultural production. Worse, fertiliser prices soured when the summer-autumn crop was coming in April and May.

The ministry pointed out that Vietnam uses around 10 million tonnes of fertilisers each year. Last year, the country consumed 10.7 million tonnes, up by 4.67 percent over 2020, the ministry pointed out, forecasting the domestic demand for fertilisers was stable this year.

Domestic producers could supply major fertiliser products like phosphate, urea and NPK to meet the domestic demand.

Domestic DAP production could meet around 60 percent of demand while potash and SA fertilisers were entirely dependent on imports.

The Plant Protection Department said that it would keep a close watch on the global and domestic fertiliser market to timely raise measures to ensure agricultural production, urging import companies to look for alternative fertiliser suppliers, especially potash.

The MARD urged the Ministry of Industry and Trade to consider lifting the imposition of trade defence measures on imported DAP and MAP while enhancing market inspections to prevent speculation and fake and low-quality fertiliser.

The MARD said it was also necessary to review tax policies on fertilisers.

It also said that farmers should increase the application of new farming techniques to reduce chemical fertilisers and replace them with organic fertilisers.

The ministry’s statistics showed that Vietnam must import around 2.7-3.5 million tonnes of fertilisers each year, of which potash accounted for 25-28 percent and SA 25-31 percent.

The fertiliser import from Russia made up around 130,000-380,000 tonnes, accounting for 3-9.5 percent of Vietnam’s fertiliser imports, mainly potash, NPK and DAP.

Last year, Vietnam imported more than 5.1 million tonnes, 31.1 percent of which was SA, and 25.3 percent was potash. Potash was imported from 30 markets. Vietnam imported 320,000 tonnes of fertilisers from Russia in 2021, mostly potash with 195,000 tonnes, accounting for more than 15 percent of potash import.

In the first two months of this year, Vietnam imported more than 706,000 tonnes, 73,800 tonnes of which came from Russia worth 40 million USD. Potash import from Russia accounted for 18 percent of the country’s potash import in the period./.
VNA

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