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Overall, the supply and demand for chemical fertilizers in our country are balanced, allowing prices to remain relatively stable. (1) Fertilizers for spring plowing are guaranteed. At present, the total supply of nitrogen fertilizers in our country exceeds demand, the production and demand for phosphorus fertilizers are roughly in balance, while potassium fertilizers need to be imported. In 2007, China’s apparent consumption of chemical fertilizers was 57.46 million tons (on a pure basis, the same applies hereafter), with production amounting to 56.96 million tons, imports at 6.434 million tons, and exports at 5.95 million tons; thus, the overall supply and demand were roughly in balance. In 2008, China will add 2 million tons of nitrogen fertilizer production capacity and 1.8 million tons of phosphate fertilizer production capacity, with the total annual output of chemical fertilizers increasing by about 10% compared to the previous year. The production of the two main varieties, urea and diammonium phosphate, will exceed domestic demand by around 5 million tons and 1.5 million tons respectively. The demand for fertilizers during spring plowing accounts for more than half of the annual total, representing the peak period for fertilizer use in agriculture. The key to ensuring a proper supply of fertilizers is to meet the needs for fertilization during spring plowing. Under normal circumstances, during the spring plowing period from January to April this year, China’s demand for chemical fertilizers is expected to be 26.6 million tons, while the available resources amount to 27.2 million tons. Among them, the output of fertilizers from January to April was 20 million tons, with about 9.2 million tons coming from inventory carried over from last year. Given the strict controls on fertilizer exports and some imports of fertilizers, the total supply of fertilizers during the spring planting season is sufficient to meet the needs of agricultural production. (II) Prevent regional fertilizer shortages. Carrying out fertilizer preparation for this year’s spring plowing also faces some new challenges. Although overall at the national level, the supply and demand of fertilizers for spring plowing are balanced, regional and variety-related disparities are quite prominent. First, snow, ice, and freezing disasters have increased the pressure on fertilizer supply. Due to the severe disruption in power supply in some areas of the south as a result of disasters, the production at several key phosphate fertilizer manufacturers has been disrupted, with a decline in their operational rates. The production of diammonium phosphate and ammonium phosphate in January and February was lower than in the same period last year. Second, the inventory of high-concentration phosphate fertilizers in the northern regions is insufficient. Due to rising prices and tight resource supplies, some businesses are waiting to see what will happen. During last winter and this spring, fertilizer distributors reduced their stockpiling of fertilizers, resulting in a significant shortage of high-concentration phosphate fertilizers in the northern regions. According to statistics from the General Supply and Marketing Cooperative Society, by the end of December last year, the total inventory of compound fertilizers in the country’s supply and marketing cooperative system was 4.16 million tons, representing a 8.31% increase on a year-on-year basis. However, the inventory of diammonium phosphate was 830,000 tons, showing a 22.8% decline compared to the previous year. Third, there is significant pressure due to rising fertilizer prices. The prices of raw materials used in fertilizer production have risen significantly. The ex-warehouse price of anthracite coal for domestic fertilizer production has risen by 107 yuan per ton over the past two years. 90% of the sulfur used in phosphate fertilizer production in our country is imported. At the beginning of last year, the import price was 73 dollars per ton, but it has now risen to 535 dollars, an increase of 6.3 times. This alone causes the production cost of diammonium phosphate to rise by about 1,500 dollars per ton. International market prices for fertilizers have risen sharply. In mid-February, the offshore price of urea in the Gulf of Arabia reached $380 per ton, up 20.6% on a year-on-year basis ； The FOB price of diammonium phosphate in the U.S. Gulf region is $800 per ton, up 164% year-on-year ； The FOB price of potassium chloride in Vancouver is $400 per ton, up 128.6% year-on-year. All regions should fully assess the difficulties involved in ensuring an adequate supply of fertilizers for this year’s spring plowing, take targeted measures to address regional and variety-specific shortages of fertilizers, organize proper fertilizer supply, and guide farmers in carrying out their spring plowing activities. (III) Fertilizer prices can be maintained at current levels during the spring plowing season. Mainly: first, **strong policies. Since December last year, the State Council has taken a series of measures to support fertilizer production, control fertilizer exports, and stabilize fertilizer prices. As of January 1, 2008, value-added tax was exempted on imported and domestically produced diammonium phosphate. On January 1 and February 15, **tariff policies were adjusted twice to control the export of urea, diammonium phosphate and ammonium phosphate, phosphorus-containing compound fertilizers, and sulfuric acid. **The scale of the strategic stockpile of chemical fertilizers for the 2007/2008 period was also increased from 8 million tons to 10 million tons, with a focus on raising the stockpile volume of phosphate-based compound fertilizers. **Continue to offer price discounts on electricity and gas for fertilizer companies, as well as preferential freight rates for the railway transportation of fertilizers. Second, power supply has been restored in the disaster area. At present, the power supply to fertilizer manufacturers in the affected southern provinces and regions such as Guizhou and Yunnan has been restored, and fertilizer production has returned to normal. Third, it is favorable for enterprise production. Despite the rise in prices of coal and imported sulfur, urea producers still have room for profit, and the production of phosphate fertilizers and compound phosphate fertilizers is also profitable at current market prices. Therefore, during the spring plowing season, fertilizer prices should remain at their current level, and it is possible for them to stay at that level. (IV) **Take measures to compensate farmers growing grain for the increased expenses caused by rising fertilizer prices.** To offset the increased expenses for grain farmers due to rising fertilizer prices, **measures such as raising the prices for purchasing grain and increasing the standards for direct subsidies for agricultural inputs have been taken to maintain farmers’ enthusiasm for growing grain. (1) Raise the minimum purchase price for grain. With the approval of the State Council, starting this year when the new harvest is available, the minimum purchase prices for grains have been increased. Specifically, the price per 500 grams of white wheat and red wheat (including mixed wheat) has been raised by 3 fen and 1 fen respectively, while the prices of japonica rice, medium-late indica rice, and early indica rice have been increased by 4 fen, 4 fen, and 5 fen respectively. (2) Increase corn reserves. To address the difficulties in selling corn in the Northeast, **companies such as Sinograin have been tasked with purchasing corn in Liaoning, Jilin, and Heilongjiang provinces at prices of 0.71 yuan, 0.70 yuan, and 0.69 yuan per jin respectively, in order to stabilize corn prices. (3) Subsidize the freight for rice. **Subsidies for japonica rice and shipping costs are provided to encourage food enterprises in the south to purchase from the northeast, thereby boosting the sales of rice from that region and stabilizing rice prices. (4) Raise the standard for comprehensive direct subsidies. In 2008, the comprehensive direct subsidies for agricultural inputs for grain growers were further increased, with an average rise of 13 yuan per mu across the country. In addition, subsidies for farmers in the form of subsidies for high-quality seeds, subsidies for purchasing agricultural machinery, and subsidies for soil-testing-based fertilization have also seen a significant increase. Overall, **the policy subsidies for farmers and the income from price increases should be higher** than the additional expenses incurred by farmers due to rising fertilizer prices.