Hot report: What are the reasons for the use of fertilizer winter cake?

As the critical season for fertilizer winter storage approaches, it's surprising to see little enthusiasm from key players in the industry. Despite the introduction of the "Administrative Measures for the Reserves of the Chemical Fertilizer Off-season" and its supplementary provisions, a recent investigation in Henan Province—a major agricultural and fertilizer production hub—revealed that neither manufacturers nor distributors are showing interest in stockpiling fertilizers. Even farmers, who often complain about high prices, seem uninterested in the concept of winter storage. So why isn’t anyone taking part? The answer lies in a combination of policy restrictions, financial concerns, and market uncertainty. For manufacturers, the government’s price controls have made it risky to store large quantities. In 2004, the export tax rebate on urea was canceled, and in 2005, a provisional tariff was introduced. This year, a 30% seasonal tariff was imposed on urea exports, leading to a significant drop in exports. According to reports, China’s urea exports fell by nearly 800,000 tons in the first 10 months of this year, a 26.8% decline. Fertilizer companies are now reluctant to hold inventory, as they fear selling at controlled domestic prices could result in losses. One company executive in Henan explained that storing large amounts of fertilizer would tie up capital and incur heavy interest costs. Selling at the capped price next year could mean buying high and selling low, which is not feasible for already low-margin businesses. Some companies with export capabilities are now focusing on international markets, especially in Southeast Asia, to offset domestic losses. Exporting urea has become a more attractive option than holding onto domestic stocks. For dealers, the situation is no better. In previous years, off-season storage was profitable due to lower prices and ample supply. But since 2005, when price controls were tightened, many dealers lost money. As a result, they are now hesitant to stock up again. Most small dealers are simply buying and selling without holding inventory, while larger companies handle the bulk of the storage. Farmers, too, are waiting. With urea prices falling in some regions, many are choosing to delay purchases. In Zhumadian City, for example, urea prices dropped below the national limit, prompting farmers to wait for further declines. Some even recall last year’s experience, where they bought at high prices only to see prices drop shortly after. With the government planning direct subsidies for farmers, many believe they won’t need to stockpile. This has further dampened interest in winter storage. In conclusion, despite well-intentioned policies, the current lack of participation in fertilizer winter storage highlights deeper issues in the market. Without proper incentives or adjustments, the system may continue to struggle. It’s time for policymakers to rethink their approach and ensure that all stakeholders—manufacturers, dealers, and farmers—are aligned in supporting the agricultural sector.

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