With just over 1.3 billion people, China is the world's largest and most populous country, representing a full 20% of the world's population. Its rapid growth in economics development has resulted in the decrease of arable land, hence fertiliser usage is important as a means of increasing crop production yields for its agricultural industry.
PRC fertiliser producers have been enjoying preferential policies which include VAT exemption and electricity subsidy from the PRC government. At the same time, PRC fertiliser producers are also subject to a price ceiling for urea sales as part of the PRC government’s measures to ensure stable fertiliser prices. But according to indications from the PRC government on potential reforms to government policies relating to the chemical fertiliser industry, deregulation of the chemical fertiliser industry is expected to be carried out over the next three to five years. This may comprise the removal of the price ceiling on urea products and the removal or reduction of the preferential policies (including VAT exemptions and electricity subsidy) which are currently extended to the chemical fertiliser industry, eventually leading to the commercialisation of the whole chemical fertiliser industry.
The PRC chemical fertiliser industry is highly fragmented and comprises of many producers spread across the country according to factors such as resources and categories of fertiliser products. The PRC government supports and encourages the growth and development of large nitrogenous fertiliser producers as well as industry consolidation with the aim of updating existing production technology and reducing pollution.
