Business

Tuesday April 7, 2009

Need for stability in fertiliser prices

Commodities Talk - By Hanim Adnan


Government, planters and and industry players must meet and have dialogues to achieve this

THE heavy use of fertilisers plays a pivotal role in sustaining high crop yields and maintaining profitability in Malaysia’s diversed agriculture sector, from oil palm to pineapples and vegetables.

Given the importance of fertilisers, their prices are often scrutinised closely among planters as well as fertiliser suppliers and importers alike.

While local fertiliser players have maintained that they have not formed a cartel, they continue to face pressure from plantation owners, smallholders and farmers to reduce prices in the wake of the steep fall in commodity prices.

Just last week, the Fertiliser Industry Association of Malaysia (FIAM) chairman Zainal Matassan was quoted as saying that local fertiliser prices could fall further in the next five months due to uncertainties in the global fertiliser prices and the slow shipment of fertilisers worldwide.

He clarified that the situation was set to reverse after the Belarusian Potash Co, a major world potash exporter, confirmed that “higher priced” sales of Muriate of Potash (MOP) – the most popular fertiliser among planters – had been made to Brazil.

This was subsequently followed by Canpotex Ltd of Canada’s latest sales to Indonesia and Malaysia of US$735 per tonne CFR (cost and freight) for April-May shipments.

These latest external developments could lead to a rise in the prices of local fertilisers in the coming months.

Contrary to market expectations for local fertilisers to be traded within US$500 to US$520 per tonne, prices could range higher than US$750 per tonne in the coming months – far beyond the control of FIAM, which represents 80% of the country’s fertiliser players.

But it should be noted that the current imports of major plant nutrients – nitrogen, phosphorus and potassium or better known as NPK – are still 30% lower than the peak of above RM3,000 per tonne in September 2008.

The Government will need to continuously monitor fertiliser prices, including fertiliser imports and their distribution, to achieve some stability in local fertiliser prices as well as maintaining a “win-win” situation for both fertiliser importers/suppliers and local planters.

There is an immediate need for more proactive dialogues and meetings between the Agriculture Ministry, Plantation Industries and Commodities Ministry and related parties – fertiliser players and planters – to ensure better transparency in matters pertaining to fertiliser.

One must never overlook the contribution of fertilisers to the agriculture sector, especially in food production.

  • Hanim Adnan is assistant news editor at The Star. She feels Malaysia needs a dedicated Fertiliser Board to look after the affairs of both planters and fertiliser players.


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