High exports but challenges ahead for fertiliser industry

Vietnamese fertiliser exports were riding high in 2022 with an aggregate volume of 1.7 million tonnes, bringing in over 1 billion USD.
High exports but challenges ahead for fertiliser industry ảnh 1A fertiliser production line of the Petro Vietnam Ca Mau Fertiliser JSC. (Photo: VNA)
Hanoi (VNS/VNA) - Vietnamese fertiliser exports were riding high in 2022 with an aggregate volume of 1.7 million tonnes, bringing in over 1 billion USD.

As organic agriculture has begun to gain traction in the world, organic fertiliser exports reached 2.91 million tonnes last year, up 14% year-by-year. The number of organic fertiliser factories hit 468, four times as high as the number in 2017.

However, high exports are only part of the story. In fact, Vietnam imported 3.44 million tonnes of fertilisers last year as some types of fertilisers could not be produced domestically. Of the imports, 0.46 million tonnes are organic and 3 million tonnes are non-organic. 

The Ministry of Agriculture and Rural Development revealed that there were 792 fertiliser factories in the country in 2022, 112 factories lower than the figure in 2021.  

The ministry remarked that the mounting prices of fertilisers in 2022 were pushing up agricultural costs, driving many farmers into unprofitability. 

Specifically, fertiliser costs increased from around 25% of their total costs to roughly 50%, surpassing the rise in their revenues. Substandard fertilisers added to their woes by causing damage to their crops. 

As such, the Vietnam Fertiliser Association (VFA) urged domestic fertiliser producers to invest further in advanced technologies to improve efficiency and cut costs, which would reduce fertiliser prices to the relief of farmers.

"Production should be distributed equally between non-organic and organic fertilisers as the latter has become a trend globally," added Nguyen Tri Ngoc, VFA deputy director.

The International Fertiliser Association (IFA) had three scenarios for the global fertiliser market in 2023.

Under the worst-case scenario, global fertiliser demand would fall in 2023 and stand at 194.6 million tonnes in 2026. Under the midpoint scenario, global demand would reach 201.1 million tonnes in the next three years. Under the best-case scenario, the figure is adjusted to 211.1 million tonnes.

Fertiliser prices, meanwhile, are not likely to drop in 2023 under all three scenarios. 

Over the past 50 years, global fertilisers witnessed three booms in prices, one between 1973-1974, one between 2007-2008, and one from 2021 until now. 

The recent boom in fertiliser prices was triggered by the balloon in prices of natural gas, which accounts for about over 70% of fertiliser production costs. Some factories which were unable to transfer higher costs to higher fertiliser prices have been left with no choice but to shut down.

The Russia-Ukraine conflict fuelled the situation by causing global supply chain disruptions. Specifically, Russia has suspended its fertiliser exports to cater to domestic demand. The suspension will remain in effect until May 2023./.

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