China will likely impose even more severe export duties on fertilizer in coming years, Russian producer PhosAgro(PHOR.RS) said Monday, as the Asian powerhouse attempts to control rising domestic agricultural costs and ensure it grows enough grain to feed a booming population.
Chief Executive Maxim Volkov told Dow Jones Newswires that China will likely impose more severe duties on all phosphate products in the future because of a desperate need for increased phosphate levels in its arable soil, while authorities will also likely extend tariffs to include low quality fertilizers.
China's 2011 export tariffs are 110% in the peak season and 7% in the off season for both diammonium phosphate, known as DAP and monoammonium phosphate or MAP, two of the most commonly traded phosphate fertilizers. The 110% level comprises of a regular tax rate of 35% and a special export tariff of 75%.
Volkov said there are some "strong rumors" triple superphosphate, or TSP, another of the most commonly traded phosphate fertilizers, will soon be subject to Chinese increases in duty from its current 7% export tariff.
The country's high-grade phosphate rock reserves are depleted, Volkov said, meaning it is very hard to produce high-quality DAP domestically, so China is constantly trying to source supplies from other nations such as Australia and Kazakhstan.
"Let's not forget that China doesn't have sufficient amounts of sulfur to produce phosphate fertilizers, so they are importing substantial amounts from the rest of the world," Volkov said.
China uses 54 million metric tons of fertilizer a year, the largest in the world, according to the state-run China Daily, and the country uses 341 kilograms of fertilizer per hectare, higher than in most other countries.