Fertilizer Raw Material Prices Triple... Agflation Approaches

Element price $1030 per ton... More than triple compared to the end of last year
Fertilizer price pass-through likely... NongHyup "Fertilizer costs for farms to increase by 185.7 billion won in Q1"

[Sejong=Asia Economy Reporter Moon Chaeseok] Mr. A, a farmer in Jeju Island who finished sowing onions in mid-this month, is very worried about ruining his citrus farm. He needs to apply urea fertilizer to the orchard right after harvesting tangerines next month, but obtaining it from the nearby Nonghyup has become as difficult as catching a star in the sky.

Mr. Hong, who cultivates field crops in Uiseong-gun, Gyeongsangbuk-do, is also struggling to purchase fertilizer recently. Using 100 bags (1 bag = 20 kg) of fertilizer annually, Mr. Hong started stockpiling fertilizer ahead of next year’s farming season after hearing that prices would rise, but even after inquiring at nearby Nonghyup branches, he only heard that there was no stock. Although it is the off-season for fertilizer and the government was confident that supply was sufficient, the reality was different. Mr. Hong said, "I’m not sure if there is enough fertilizer stock, but it seems that the volume is not being released because the possibility of price increases is high. If manufacturers raise fertilizer prices, farmers’ production costs for agricultural products will also increase, inevitably leading to higher consumer prices for major crops."

Fertilizer prices are becoming alarming. Following supply shortages caused by the urea shortage from China, the sharp rise in raw material prices has significantly increased pressure to raise fertilizer prices.

According to the Korea Fertilizer Association on the 24th, the price of urea, one of the recent fertilizer raw materials, is $1,030 per ton, more than three times higher than $300 at the end of last year. Potassium chloride is $600, 2.5 times higher during the same period, ammonia is $695, up 2.3 times, and diammonium phosphate (DAP) rose 2.2 times to $790?800. The consumer retail price per bag of fertilizer (single type) increased by 14.9% from 10,330 won in the first half of this year to 11,870 won in the second half. The price of compound fertilizer including urea also rose 12.7% during the same period, from 12,090 won to 13,630 won.

Farmers growing Jeju tangerines or winter crops in the southern regions are in an emergency. The agricultural sector believes that price is a bigger problem than supply. Under the current contract prices, it is not easy for fertilizer companies to maintain profitability. A representative from a fertilizer agency in Changnyeong, Gyeongnam, said, "No fertilizer shipments are coming in at all."

Considering the recent trend of rising raw material prices, forecasts suggest even greater increases next year. The National Agricultural Cooperative Federation recently submitted data to Assemblyman Joo Cheol-hyun of the Democratic Party, stating that an 81% increase factor has occurred based on sales prices, and that the burden on farmers will increase by 185.7 billion won in the first quarter of next year alone. Nonghyup has set a policy to adjust fertilizer prices quarterly starting next year, instead of annually as before. This means they intend to reflect price increases promptly.

This content was produced with the assistance of AI translation services.