Fertilizer deal hits snag as prices soar

By: Jordeene B. Lagare - 3 years ago

FARM WORK A farmer spreads fertilizer granules as he walks through his rice field in Bambang town, Nueva Vizcaya province. —KARLSTON LAPNITEN/FILE PHOTO

Steep global prices, exacerbated by logistic problems and the worsening Russia-Ukraine crisis, are hampering government efforts to sign a fertilizer supply deal with other countries.

The Philippines has been negotiating with fertilizer-producing countries, including China, Indonesia, Malaysia, and Iran, to arrest farm input costs which have more than doubled from a year ago.

But Fertilizer and Pesticide Authority (FPA) director Wilfredo Roldan said that while Iran and China had agreed to supply the country with fertilizer, there were no final deals.

“In principle, Iran suppliers are committing 300,000 metric tons of urea but no firm offer yet on price,” Roldan told the Inquirer in a text message, adding that the figure being quoted was 8 percent lower than prevailing international prices.

Despite the discounted price, the imported fertilizer would still be expensive considering the account freight cost, or the expense of delivering goods from one place to another, which ranges from $75 to $80 per MT.

“We hope the Russia-Ukraine issues will be resolved soonest, otherwise [the] price of agricultural products would increase,” Roldan said.

The Philippines does not directly import fertilizers from either Russia and Ukraine—which account for 18 and 4 percent, respectively, of the total global supply of urea—but the Department of Agriculture (DA) earlier said the conflict between the two countries would greatly reduce the volume traded globally.

At the same time, the government was studying a proposal from China amid a ban imposed by the latter on fertilizer exports to other countries, including the Philippines.

“China has agreed in principle to allow export volume for [the] Philippines but until now they have not made an offer,” Roldan said.

Logistics problem

Ranilo Maderazo, president of Planters Products Inc., a corporation supervised by the DA, said they were looking to buy fertilizers at around $600 per MT.

“We are looking [at] last year’s (October) offer of $600 to $620 [per MT] because they may not agree [to] $350 during lean months (March-June). The problem is logistics,” he told the Inquirer.

According to Roldan, China and Indonesia are still delivering fertilizer in small quantities. China, in particular, is supplying 1,000 MT to 2,500 MT.

He noted that the latest arrivals were priced between $765 and $850 per MT compared to last week’s $975 per MT.

FPA data showed that, locally, the average retail price of prilled urea was P2,544.07 per 50-kilo bag based on prices between Feb. 14 and Feb. 18. This was much higher than the P1,069.81 per 50-kilo bag around the same period last year.

On the other hand, the average price of granular urea surged to P2,548.61 per 50-kilo bag from P1,019.15 per 50-kilo bag year-on-year while ammosul cost around P1,394.01 per 50-kilo bag from P604.84 per 50-kilo bag.

Roldan said most farmers were currently using ammonium sulfate and less urea.

To cushion the impact of Russia’s invasion of Ukraine on the country’s food security, President Duterte approved additional funds for a “Plant, Plant, Plant” program part two as global oil prices exceeded $100 per barrel.

The bulk of the funding would go to fertilizer subsidies for farmers planting rice, corn, high-value crops, sugarcane, and coconut, as well as urban and peri-urban agriculture, production of animal feeds, enhancement of aquaculture and mariculture fishery production and food mobilization, and the “Kadiwa ni Ani at Kita” marketing program.