China’s fertilizer industry is in a difficult plight. Against the backdrop of global financial crisis, the
government has issued a series of policies to maintain economic growth. BOABC finds that these
policies have little impact on the fertilizer industry.
The raise of grain procurement price and subsidy for farm materials, fine seeds, farm machines,
etc. help increase farmers’ income and their purchasing power. But it takes a long time for the
policies to make an impact on the fertilizer industry.
The VAT reform allows enterprises to deduct VAT from purchased facilities from 2009 on, a policy
to cut enterprises’ burden. But as most fertilizer companies have been granted exemption of VAT
in the production link or VAT refund, this reform has no impact on the fertilizer industry.
The government has raised tax refund rate for the exports of some products. But the
government’s policy of controlling fertilizer exports to ensure domestic supply remains unchanged.
During the slack season of fertilizer consumption, the 100 ~ 150% special export tax has become
a major barrier to fertilizer industry’s development.
The government promises to give more financial support to economy growth, which means that
fertilizer companies may obtain more bank loans for fertilizer reserve, technical upgrading and
corporate merger. But fertilizer companies should not be too optimistic about this policy.
