The recent increase in fertilizer prices was based on the global market mechanism, and the scale of price fluctuations and adjustments were within the normal range, a Council of Agriculture (COA) official said Thursday.

In response to farmers' complaints about the price hikes, the official explained that due to soaring global prices of nitrogen fertilizer, domestic suppliers have raised the prices of ammonium sulphate and compound fertilizer No 42 to reflect costs.

In addition, the price hikes were partially due to a discontinuation of government subsidization of those two fertilizer products, the official said, adding that the COA has asked suppliers to absorb the increase in the cost of raw materials.

There have been fluctuations in the prices of another 11 types of subsidized fertilizers, the official noted. In some cases, such as potassium chloride and special fertilizer No 4, the price fell, while in eight cases it remained unchanged. The price of urea rose, but the hike was offset by an increase in the government subsidy, the official added.

In May 2008, the COA convened a fertilizer price screening panel of academics, experts and COA representatives, which has devised a system of calculating fertilizer prices based on international raw material prices and reflective of production costs, the official noted.

The government halted its fertilizer subsidies in September 2009 because global prices of raw materials began to fall in October 2008, which led to cuts in the prices of ammonium sulphate, component fertilizer No 42, special fertilizer No. 42 and four other types of fertilizers to the levels of May 30, 2008.

However, the government continued to offer subsidies for 11 other types of fertilizers. Since May 30, 2008, the COA has provided NT$5.75 billion in subsidies to help defray the rising global costs of fertilizer raw material, the official said. This has allowed Taiwan farmers to buy fertilizers at prices much lower than in neighboring markets, the official added.

For example, the average price of fertilizer in Taiwan is NT$9,100 per ton, far below the NT$28,000 in Japan and slightly lower than the NT$9,430 on the mainland, the official pointed out.

China Daily/CNA

(HK Edition 03/19/2010 page8)