Nitrogen Fertilizer Association: Ensuring a stable supply of nitrogen fertilizers from four aspects
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On May 13, the 2022 Spring Nitrogen Fertilizer Market Analysis Meeting was held via video conference in Beijing. Gu Zongqin, president of the China Nitrogen Fertilizer Industry Association, attended the meeting and delivered a report titled \"Working Together to Overcome Challenges and Ensure the Stable Operation of the Domestic Nitrogen Fertilizer Market.\" In this report, he analyzed the current situation in the nitrogen fertilizer industry, studied the market trends for the spring and throughout the year, and identified the key priorities for market activities this year. Gu Zongqin pointed out that China has a population of 1.4 billion, and the issue of food is of top priority. The current international situation is complex, and food security is a top priority. Ensuring a stable supply and prices of nitrogen fertilizers is a major responsibility of the nitrogen fertilizer industry. It is necessary to resolutely implement the spirit of documents issued by ministries and commissions such as the National Development and Reform Commission, and focus on ensuring an adequate supply of nitrogen fertilizers during the spring and summer from four key aspects. First, it is necessary to ensure a stable supply of nitrogen fertilizer during spring and summer. The industry needs to organize nitrogen fertilizer production properly, ensure the safe and stable operation of the facilities used for its production, and increase nitrogen fertilizer output as much as possible while maintaining safety. During spring and summer, nitrogen fertilizer resources should be prioritized for the domestic market. Gu Zongqin pointed out that nitrogen fertilizer manufacturers must be honest and trustworthy, and strictly fulfill the supply contracts with domestic fertilizer distributors and end-users. Fertilizer production and distribution enterprises should enhance communication among themselves, maintain close ties with transportation agencies, develop plans to prevent the spread of diseases in the logistics process, reduce supply delays caused by pandemic control measures and transportation issues, and meet the needs of agriculture and farmers in a timely manner. Gu Zongqin emphasized that enterprises responsible for storing fertilizer during the summer should supply the necessary goods in accordance with the requirements for storage management. Large state-owned trading companies should take the lead in ensuring a stable supply of nitrogen fertilizers, and manufacturers with the necessary resources should also establish storage facilities in the areas where their products are mainly sold, so as to stockpile nitrogen fertilizers in those markets in advance and enhance the capacity to provide emergency supplies, thereby avoiding sharp fluctuations in the market caused by concentrated shipments or market hesitation. The Nitrogen Fertilizer Association should strengthen the monitoring of nitrogen fertilizer production and operation, and promptly report to the relevant authorities any emerging, tendential, or potential issues related to the supply of nitrogen fertilizers during the spring and summer periods. Thanks to the efforts of all parties, nitrogen fertilizer production had a strong start in the first four months of this year. According to statistics from the China Nitrogen Fertilizer Industry Association, the average operating rate of urea production from January to April 2022 was 72.0%, an increase of 2.74 percentage points compared to the previous year. The total urea production during that period was 18.756 million tons, representing a 3.92% increase on a year-on-year basis. From the perspective of current supply and demand, according to estimates by the China Nitrogen Fertilizer Industry Association, the supply of urea released into the domestic market in the fourth quarter of 2021 and the first quarter of 2022 was 25.98 million tons, an increase of 2.17 million tons compared to the previous year, representing a growth rate of 9.1%. Therefore, despite the increasing uncertainties in the international situation, thanks to the assurance of nitrogen fertilizer production capacity in our country, the supply of nitrogen fertilizers has remained sufficient since this year’s spring plowing season, and prices have generally stayed within a reasonable range.
Second, stabilize the market prices of nitrogen fertilizers in spring and summer. Gu Zongqin believes that stabilizing nitrogen fertilizer prices is an important guarantee for boosting farmers’ enthusiasm for growing grain and maintaining the bottom line of food security; it is also an undeniable responsibility of the nitrogen fertilizer industry. Stabilizing the nitrogen fertilizer market means stabilizing market expectations and preventing sharp fluctuations in the industry’s development; it is also necessary to protect the nitrogen fertilizer production and distribution enterprises themselves. If the price of nitrogen fertilizers exceeds a reasonable range, it will undoubtedly dampen farmers’ enthusiasm for growing crops and using fertilizers, reduce demand for downstream products, and at the same time make it easy for hot money to flow into the futures market, thereby creating risks. Gu Zongqin pointed out that current nitrogen fertilizer prices are high; in many areas, the price of urea exceeds 3,000 yuan per ton, approaching historical highs. Farmers are reluctant to purchase such fertilizers, which hinders the development of the nitrogen fertilizer market and is even more detrimental to food security. Therefore, key nitrogen fertilizer manufacturers and distributors should work together to strengthen industry self-discipline and consciously maintain order in the nitrogen fertilizer market. They must take into full account the affordability of farmers and strive to keep prices at a reasonable level. It is recommended that the Zhengzhou Commodity Exchange closely monitor the performance of futures contracts, prepare emergency plans, curb excessive speculation, and prevent futures prices from deviating significantly from those in the spot market. It should be noted that since the distribution of nitrogen fertilizer resources does not always match demand, some nitrogen fertilizers have to be transported over long distances. Additionally, due to differences in farming seasons across different regions, and the need to purchase raw materials for compound fertilizers in advance for use during the summer, it is difficult to ensure an adequate supply of nitrogen fertilizers during spring and summer. In previous years, there have been instances in certain areas and at certain times when the demand for nitrogen fertilizers exceeded supply, leading to price increases. In March this year, outbreaks of the disease occurred successively in regions such as the Northeast and East China, posing significant difficulties for the transportation of fertilizers. To this end, the nitrogen fertilizer industry promptly brought these issues to the attention of the relevant authorities, suggesting that the priority given to the transportation of fertilizer products be increased, as well as proposing measures to ensure smooth transportation of fertilizer products and raw materials. Subsequently, the relevant authorities introduced targeted policies, and the difficulties in shipping fertilizers gradually improved.
Third, efforts to crack down on fake agricultural supplies need to be intensified. “Fertilizer prices are rising, and fraud and counterfeiting are on the increase.” This year, due to high prices of chemical fertilizers, there has been an increase in the practice of producing ammonium chloride and ammonium sulfate through extrusion granulation, then labeling these products as \"nitrogen\", \"urea nitrogen\", or \"urea-formaldehyde nitrogen\". With rising fertilizer prices, some people fabricate \"compound fertilizers\" and sell them, leading farmers to mistakenly believe they are urea or new types of urea; in some cases, these products are even sold directly as \"compound fertilizers\" to maximize profits. This not only harms farmers but also severely disrupts the competitive order in the fertilizer market. We call on the **relevant authorities to pay close attention to this issue, fulfill their duties, and take strict action against illegal practices such as adulteration, fake labeling, false measurement claims, and price fraud, in order to clean up the agricultural supplies market and protect the legitimate rights and interests of farmers. Furthermore, it is recommended that various functional departments carry out extensive outreach activities on fertilizer knowledge and legal education, so as to improve farmers’ ability to distinguish between genuine and fake products as well as their awareness of protecting their rights. Necessary legal assistance should also be provided to farmers to help them safeguard their legitimate rights and interests. Gu Zongqin emphasized that while ensuring the quality of their nitrogen fertilizers and compound fertilizers, nitrogen fertilizer manufacturers should also accelerate the development of systems for tracking fertilizers and preventing counterfeiting. This will enable it to be possible to trace the origin of products, monitor their flow, prevent risks, and hold those responsible accountable, thereby enhancing the ability to prevent counterfeiting of nitrogen fertilizers. The industry standard for \"Requirements for Fertilizer Product Traceability Systems\" is expected to be released soon, and enterprises that have already established traceability systems should connect to the national platform as early as possible.
Fourth, actively carry out work to save energy and reduce carbon emissions in nitrogen fertilizer use. Gu Zongqin pointed out that during the 14th Five-Year Plan period, carrying out efforts to save energy and reduce carbon emissions is an important means for the nitrogen fertilizer industry to adhere to the concept of green development and achieve high-quality growth. **The National Development and Reform Commission has issued the \"Guidelines for Energy Conservation and Carbon Reduction Transformations in the Synthetic Ammonia Industry.\" All nitrogen fertilizer manufacturers should study and understand these guidelines carefully, and based on their own operational conditions, accelerate the implementation of energy conservation and carbon reduction measures in their production facilities in order to reduce carbon emissions during the production of nitrogen fertilizers. At the same time, since nitrogen lost during the application of nitrogen fertilizers enters the environment and turns into greenhouse gases, improving the efficiency of nitrogen fertilizer use can **reduce the amount of nitrogen fertilizer needed, as well as the carbon emissions associated with its production and the environmental pollution caused by its application. In recent years, positive progress has been made in the promotion of high-efficiency urea in our country, and its sales have grown rapidly. According to a survey by the China Nitrogen Fertilizer Industry Association, in 2021 the sales volume of high-efficiency urea across the industry reached 3.17 million tons, accounting for 5.7% of total urea sales. Nitrogen fertilizer manufacturers need to continuously develop new varieties of high-efficiency urea, intensify the promotion of these new types of urea, and further expand their market share in this sector. The nitrogen fertilizer industry should accelerate the research and development of the \"Group Standard for Evaluating Low-Carbon and High-Efficiency Nitrogen Fertilizers\" in order to promote the research, development, dissemination, and application of such fertilizers.