Private capital obtains “pass” for fertilizer circulation

The State Council recently issued a decision on further deepening the reform of the chemical fertilizer distribution system. This is a major change in the circulation system of fertilizers since the reform in 1998. The decision will remove the restriction on the nature of the ownership of chemical fertilizer companies and allow market entities with qualified ownership and organizational types, farmer professional cooperatives, and individual industrial and commercial households to enter the fertilizer circulation field, participate in operations, and compete fairly.
According to industry sources, allowing companies of different ownership systems to enter into fertilizer operations is actually opening up the industry from a policy and giving private capital access.
Experts said that broadening access to private investment and lowering the threshold for private investment is the key to inciting private investment. At present, there are many areas that are controlled by the state. Private capital is difficult to enter because it is restricted by registered capital, policy factors, or poor approval procedures.
The decision of the State Council stipulated that the enterprises applying for chemical fertilizer operations must have corresponding residences, and the individual industrial and commercial households applying for chemical fertilizer operations must have corresponding business sites; the amount of registered capital (gold) and individual industrial and commercial households must not be less than the amount of funds. 30,000 yuan; apply to set up branches within the province and engage in chemical fertilizer business; the registered capital (gold) of the company's headquarters shall not be less than 10 million yuan; apply to establish branches across provinces and engage in chemical fertilizer business The registered capital (gold) of the corporate headquarters shall not be less than 30 million yuan.
Due to the downturn of the fertilizer market during this period, the country first adjusted the export tariffs on chemical fertilizers and phosphorus chemical products. Now that the restrictions on the opening of chemical fertilizers are open, they all hope to promote the development of the fertilizer industry. However, the impact of the latest policies on the fertilizer industry may not be particularly large. After all, the restrictions on chemical fertilizers are only liberalized, not the production restrictions. The field of fertilizer production itself has exceeded supply, and this area is also more professional. Even if we liberalize the distribution, we may not have a large number of companies influx. The increase in the number of dealers is possible, but mainly depends on the increase in market demand.

The State Council’s decision also stated that the state will encourage large-scale fertilizer production and distribution companies and social capital with a certain strength and scale to integrate resources and develop chain and intensive operations through mergers and acquisitions. For the construction and improvement of regional fertilizer trading market and fertilizer reserves, operations and modern logistics facilities, governments at all levels must actively support them.

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