China's farmers face fertiliser crunch as COVID measures hamper deliveries

Sinofert Holdings

01/04/2022 06:09

By Dominique Patton and Hallie Gu
    BEIJING, April 1 (Reuters) - China's COVID-19 curbs are
disrupting the supply of fertiliser to the country's
northeastern bread basket just a month away from spring
planting, threatening this year's corn and soybean crops if not
resolved soon.
    Farmers typically have fertiliser prepared in early April
before applying to fields later in the month during planting.
But China's worst outbreak of COVID since the pandemic began two
years ago have triggered strict controls on movement of people
and goods, sharply slowing deliveries.
    Fertiliser producers, dealers, analysts and associations
said rules requiring truck drivers to take COVID tests every 24
hours, a need to obtain special passes to deliver goods and
factory suspensions due to local COVID cases are all
contributing to tight supplies. 
    "Production of nitrogen fertiliser and fertiliser
preparation for spring planting has been greatly affected," the
China Nitrogen Fertilizer Industry Association said this week.
    Jilin, China's second-largest corn-growing province, is
among the hardest hit after the local government banned movement
of people across the provincial border, and within, from Mar. 14
as COVID cases hit thousands daily.
    "Fertiliser supply here couldn't be tighter," said a
Jilin-based dealer surnamed Yan, who is short more than 2,000
tonnes of the critical crop nutrient for his customers.
    The bottleneck comes on top of record fertiliser prices,
driven up by strong global demand, high energy costs and
sanctions on major producers Russia and Belarus.  urn:newsml:reuters.com:*:nL2N2VI30O
    Despite efforts by Beijing to cool prices, China's wholesale
fertiliser index (CFCI) is 40% higher than a year ago.
 urn:newsml:reuters.com:*:nL2N2VH0OH
    That had discouraged many dealers from building stocks in
recent months, catching them short in their busiest sales
period.
    Yao, a dealer in Liaoning, said he's short about a third of
his needs.
    The transport curbs are especially problematic for the
northeast, which does not have enough local fertiliser
production and relies on deliveries from other provinces.
    The northeast's Heilongjiang, Jilin and Liaoning provinces
and Inner Mongolia region produce more than 40% of China's corn
and half its soybeans. 
    Prices of corn  DCCcv1 and soybeans  DSAcv1  are hovering at
record highs. 
    Top fertiliser producer Sinofert Holdings  0297.HK  still
had about 80,000-100,000 tonnes of product waiting to be
shipped, executive director Ma Yue told reporters on an earnings
call last week, even after getting about 1,000 "green passes"
for trucks.
    The special passes to deliver critical goods take time to
process and must be renewed daily. It has also become
increasingly difficult to find drivers willing to work under the
restrictions, dealers said. 
    The challenges come even as Beijing repeatedly calls for
all-out efforts to guarantee successful harvests amid global
food security concerns.  urn:newsml:reuters.com:*:nL3N2VL2TI urn:newsml:reuters.com:*:nL2N2VD045
    Fertiliser had reached 68.8% of Jilin's farming households
by Wednesday, despite the challenges, government paper the Jilin
Daily reported, adding that the supply of farm materials was
"orderly and stable".

 (Reporting by Dominique Patton, Hallie Gu and Beijing Newsroom;
Editing by Kenneth Maxwell)
 ((dominique.patton@thomsonreuters.com))