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Published on April 22, 2008

Nalin Viboonchart

The Nation

Thai Fertiliser and Agricul-tural Marketing Association president Plengsakdi Pra-kaspesat said yesterday China, a leading exporter, had slapped a higher export tax on fertiliser since Sunday. The tax had risen from a range of zero to 35 per cent to 100-135 per cent. To remain in place until September 30, the export taxes are aimed at keeping chemical fertilisers for domestic consumption.

"The Chinese government's measure will affect the global chemical fertiliser industry. I expect other exporting countries to push up their prices gradually from now on," Plengsakdi said.

He noted it was high time for the government to allow local fertiliser distributors to raise their prices. While they are encountering higher import prices, the raw material costs for local manufacturing have also soared more than 100 per cent since last year.

Last year, Thailand imported 4.3 million tonnes of chemical fertiliser, of which 600,000 tonnes came from China. The rest was imported from Morocco, Saudi Arabia, Japan, Korea, Russia and other places.

Demand for fertilisers has increased sharply in line with food and energy prices. Encouraged by higher energy prices, farmers have switched to planting fuel crops: corn, tapioca, sugar cane, oil palm and soybean. To raise the output of these, farmers need a huge amount of chemical fertilisers.

 Plengsakdi added that higher prices are not a boon for local chemical fertiliser companies either, given that they have been ordered to freeze their sales prices.

"We asked the Commerce Ministry to approve a price increase in March, but so far there has been no response," he said.

"We can't forecast how far chemical fertiliser prices will increase because global prices are very volatile at the moment," he added. "Last year, 4.35 million tonnes of chemical fertilisers were consumed domestically and I estimate that this year, demand will reach 4 million tonnes to 4.5 million tonnes, depending on prices."

Plengsakdi said the association would also ask the government to negotiate with the Chinese government for the purchase of chemical fertilisers at a special price.