China Expected to Stop Phosphate Exports, Food Production Prices Expected to Rise
The cost of food production is expected to rise as the Chinese government restricts the production and export of crucial agricultural fertilizer.
- Chinese phosphate fertilizer producers set to stop exporting for more than six months
- Already high prices of important fertilizers are likely to increase
- Measures to restrict production not linked to trade tensions between China and Australia
China’s economic planning body, the National Development and Reform Commission (NDRC), is set to restrict the production and export of phosphates until the middle of next year.
Phosphorus is an essential nutrient for plants. Australian grain farmers use granular fertilizer when planting to establish crops.
Fertilizers are made from rock phosphate reserves mined mainly in China, Morocco, Western Sahara, the United States and Russia.
Last year, 65% of monoammonium phosphate (MAP) fertilizers used in Australia came from China.
Argus Media commodity pricing news agency phosphates editor Harry Minihan said US import duties on phosphates of Moroccan and Russian origin had doubled the price of the product. Last year.
He said restricting production and exports would serve China in two ways in this high price environment.
“The Chinese government wants to make sure there are enough products in the country for farmers, and it is also trying to reduce emissions.”
However, it will cause pain for other nations.
“China is the number one supplier of phosphate to Australia, and if there is an export restriction, it will have a really significant impact on Australian buyers.”
Not a commercial problem
While a phosphate shortage will drive up costs for Australian farmers, Mr Minihan said the export restriction was unrelated to trade tensions between the two countries.
“It is also going to have serious effects on other major importers,” he said.
“It’s not just Australia that is going to be affected.
“India is the largest importer of DAP in the world, and they still have significant needs for their winter rabi season.”
Difficult purchasing decisions
Wes Lefroy, senior agricultural analyst at Rabobank, said prices were also high for the full range of farm inputs, including chemicals.
“From a glyphosate perspective as well, prices outside of China have more than doubled this year, and around 65% of the world’s glyphosate comes from China, which is a large chunk of Australian supplies. “
Mr Lefroy said there was no reason to expect lower fertilizer prices until next season.
Currently, urea and phosphorus fertilizers are trading at $ 1,000 per tonne, well above usual levels.
“We expect prices to remain high until 2022, which puts farmers in a difficult position before next season,” he said.