The average price of chemical fertilizer will drop slightly in China this year, an official predicted.

He Xiaoying, an official with the price monitoring center of the National Development and Reform Commission (NDRC), made the remark at an annual meeting on China's fertilizer industry.

Although the price of fertilizer will rise during the coming spring ploughing period, it will drop after that due to growing supply and increasing competition among wholesalers and retailers, He said.

Figures show China's fertilizer output has been growing fast in recent years, thanks to favorable electricity prices for fertilizer production and tax exemptions for urea products.

In 2006, China's urea production capacity reached 50 million tons, up 12.6 percent year on year. This figure may rise by another 3 million tons this year, experts said. Meanwhile China is opening its fertilizer market to foreign competition.

The continued high production cost of fertilizer, however, will give strong support to producer prices, so fertilizer prices will not go down sharply this year, He said, expecting prices of coal and natural gas in China to rise.

The Chinese government has taken measures to stabilize fertilizer production and control fertilizer exports to guarantee market supply and stable prices. Fertilizer price hikes harm the interest of farmers, officials said.

Source: Xinhua