Difficulties and problems faced by fertilizer manufacturing enterprises

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(1) The costs for fertilizer production enterprises remain high. Bituminous coal is the main raw material for fertilizer production, yet its price remains high, accounting for 70% of the costs associated with fertilizer production. Only Jiaozuo in Henan has a small amount of anthracite, which is not sufficient to meet the local market demand; some of the anthracite is purchased from Shanxi Province. Recently, the coal mine accident in Shanxi and the government’s policy-driven consolidation of small coal mines with a production capacity of less than 300,000 tons have further contributed to the steady prices of anthracite. Even in the second half of 2008, when coal prices fell and the market was weak, the purchase price of anthracite in Shanxi remained high. A fertilizer manufacturing company in Pingdingshan reported that the price of anthracite purchased from Shanxi increased month by month from January to October 2008, rising from 746.01 yuan per ton in January to 1,105.81 yuan per ton in October. 　　(II) The incentives for electricity and gas usage in fertilizer production enterprises are insufficient. According to the managers of fertilizer companies, **there are certain preferential policies regarding electricity and gas usage for these companies, but they are not strong enough and their impact is modest. Regarding corporate electricity use, although **and the local authorities** offer certain discounts to enterprises, these discounts vary during peak electricity consumption periods. There are fewer discounts during peak times and more during off-peak times; in reality, the electricity costs for businesses do not decrease. 　　(III) Fertilizer companies face financing difficulties. According to the companies, out of concern for their own interests, banks take the initiative to offer additional support when companies do not lack funds; yet when companies are in urgent need of capital, the banks fail to provide assistance, resulting in these companies often being unable to operate properly due to funding shortages. 　　(IV) There is a shortage of freight train carriages for external transportation. According to investigations, some fertilizer manufacturers are facing a shortage of railway carriages needed to transport their products. First, plan approval is difficult; it requires coordination among multiple parties on several occasions to be resolved, which affects the normal production of enterprises ； Second, freight management is not standardized: goods are not loaded according to the weight specified for each wagon, yet fees are charged based on that specified weight. If a wagon with a rated weight of 60 tons is only allowed to carry 50 tons of cargo, the fee is still calculated based on the 60-ton rating of the wagon. In order to deliver goods promptly, companies have no choice but to accept this, which increases their sales costs. According to some companies, there is currently no severe shortage of freight cars for general shipments; only the cars needed to transport agricultural supplies are somewhat in short supply. The reason for this is that the shipping cost for agricultural goods is low, so the railways are reluctant to allocate more cars for such shipments. As a result, some fertilizer manufacturers are unable to deliver their products on time, which affects their normal production, operations, sales, as well as their reputation. 　　(5) The fertilizer market is rife with fake products. First, the entry barriers for fertilizer production enterprises are too low. In recent years, many small compound fertilizer manufacturers have emerged among fertilizer production enterprises, characterized by small scale, low technical level, weak production capacity, and insufficient funding. These enterprises have relatively poor overall competitiveness and are at a disadvantage in market competition ； Second, the fertilizer market is flooded with fake and substandard products. For the most part, the labeling on the outer packaging of these products does not match the actual amount inside; their standard content is low and the quality is poor, yet they are favored by farmers due to their low price. It is understood that a reduction of one percentage point in the content of a certain element in compound fertilizers can lead to cost savings of 70 to 80 yuan; if nitrogen, phosphorus, and potassium are all reduced by one percentage point, the cost per ton of fertilizer can be reduced by 240 yuan. The existence of these products has had a significant impact on the sales markets of large fertilizer manufacturers that operate under high standards, with high product concentrations and high costs.