Hanoi (VNS/VNA) - The Ministry of Agriculture and Rural Development (MARD) hasproposed a value-added tax on fertiliser products to support domesticproducers.

Accordingto existing regulations, fertilisers are not imposed value-added tax (VAT).Therefore, fertiliser production enterprises do not have declaration,deduction and refund of VAT for input materials. That has made input costshigh, causing selling prices to increase.

Withthe high selling price, domestically-made fertiliser producers cannot competewith imported products, and farmers must face higher production costs.

Theministry has also proposed to review the export tax policy for urea, DiammoniumPhosphate and Monoammonium Phosphate fertilisers and have export controlmeasures for those fertilisers to meet the domestic demand.

Accordingto the Ministry of Industry and Trade (MoIT), fertiliser exports saw highgrowth in the first four months, up 46.9 percent in volume and 192.6 percent invalue due to increased export prices.

MoITsaid it would review the domestic demand for this strategic product to takeappropriate management measures for export and import activities.

Thatwould take advantage of the high prices to enhance exports and ensure supplyfor domestic consumption, especially if raw material prices rose too high.

Regardingthe domestic market, due to the influence of the upward price trend on theworld market, fertiliser prices have increased compared to the previous month.

Besidesthat, the risk of supply chain disruption due to trade tensions and theRussia-Ukraine conflict, and high freight rates have also affected the domesticfertiliser industry.

Thedomestic fertiliser price is continuously increasing, causing difficulties inagricultural production.

Fromthe end of 2020 until now, fertiliser prices have continuously increased,especially since the beginning of 2022.

Fertiliserprices have been recorded at 16-18 million VND per tonne depending on the kindsof fertiliser, the highest level for 50 years.

Thefertiliser cost accounts for more than 40 percent of input cost, so the highfertiliser price will directly affect the price of agricultural products.However, farmers cannot increase the price of agricultural products.

Accordingto Nguyen Tri Ngoc, Vice Chairman of the Vietnam FertiliserAssociation, the increase in fertiliser prices has been due to the strongrise in oil prices.

Thisis the major input material for producing inorganic fertilisers such asnitrogen and urea fertiliser products.

Manyother materials and chemicals for fertiliser production, logistics costs andlabour costs have also increased. Especially, as Vietnam mainlyimports potassium from Russia and Ukraine, where there is a conflictleading to supply disruptions and higher prices.

NguyenPhu Cuong, Chairman of the Vietnam Chemical Group (Vinachem), said that toproduce DAP fertiliser, producers must buy sulfur from Russia and the MiddleEast or potassium from Russia and Belarus due to little supply from thedomestic market. Difficulties from these markets had pushed raw material pricesup.

Thesulfur price increased from 340-350 USD per tonne to 420-430 USD in just twomonths. The cost of potassium surged from 200-300 USD per tonne to 1,000 USDnow.

Ngocsaid now that the global oil price was still above 100 USD per barrel, andthere was no sign of falling below this price. Therefore, the fertiliser priceswould not be able to decrease. If the price drops, it would have only a slight decrease,forming a new price level.

Accordingto Phung Ha, an expert in the chemical fertiliser production industry, thefertiliser costs are forecast to increase continuously, so Vietnam needs tohave policies on controlling the fertiliser price increase to support farmers.

Accordingto MARD, Vietnam needed 10.7 million tonnes of fertiliser in 2021,including 7.2 million tonnes from the domestic supply.

Thenation exported 1.6 million tonnes. The fertiliser demand for agriculturalproduction in 2022 was estimated not to have large changes compared to2021.

Toensure enough fertiliser supply for the upcoming Summer-Autumn crop, domesticfertiliser manufacturers plan to enhance production, providing astable supply.

Cuongsaid Vinachem's plants were maintaining stable operation to ensureenough fertiliser supply on the domestic market with a total capacity of 1million tonnes per year at Hà Bắc and Ninh Bình fertiliser plants and 600,000tonnes of DAP fertiliser at the two plants DAP1 and DAP2 if they have enoughore for production.

Besidesthat, Ha said MARD needed to strengthen consulting activities and technicalguidance on fertiliser use to help farmers use efficiently agriculturalmaterials, including fertiliser.

Itis necessary to encourage domestic plants to increase the production of organicfertilisers to reduce dependence on urea, DAP and MAP fertilisers. The outputof organic fertiliser has also reached about 3 million tonnes, basicallymeeting the domestic demand.

NguyenNhu Cuong, Director of the Department of Crop Production, said that in thefuture, farmers should promote the use of organic fertilisers. Besides, theministry should encourage farmers to produce organic fertilisers from availableby-products and apply technology to reduce the amount of used fertiliser.

Thiswould help reduce fertiliser costs in agricultural production and, at thesame time, move towards green production./.