The burden of fertilizer purchases for farmers is expected to decrease. The government has decided to continue its existing price subsidies for chemical fertilizers even as sales prices decline.
On October 20, the Ministry of Agriculture, Food and Rural Affairs announced that it would maintain the price subsidies for chemical fertilizers to alleviate farmers' purchasing burdens following a reduction in fertilizer sales prices. Starting today, the National Agricultural Cooperative Federation (NongHyup) will lower fertilizer prices by an average of 5.1%. Notably, the price of urea fertilizer, which has seen a significant drop in raw material costs, will be reduced by 13.9%.
The government initiated the price subsidy program for chemical fertilizers in response to soaring international raw material prices in the second half of 2021, aiming to reduce the operational costs for farmers starting in 2022.
In June of this year, as the prolonged conflict in the Middle East led to rising urea prices and exchange rates, the government secured an additional 11.5 billion won in supplementary budget funds. This brings the total government funding for fertilizer price subsidies to 271 billion won, including the regular budget of 15.6 billion won. The funding sources consist of 30% from the national budget, 20% from local budgets, and 30% from NongHyup.
With recent stabilization in international raw material prices and a decline in exchange rates, fertilizer sales prices are also decreasing. The average selling price for a 20 kg bag of chemical fertilizer will drop from 20,860 won to 19,800 won, a reduction of 1,060 won. After applying a subsidy of 3,180 won, the actual burden on farmers will be approximately 16,620 won.
The price of urea, a commonly used fertilizer, will decrease from 26,600 won to 22,900 won per bag, a reduction of 3,700 won. With a subsidy of 5,650 won, the farmers' burden will be reduced to 17,250 won. However, the actual price increase for specific products may vary based on the raw material content.
The Ministry of Agriculture plans to maintain the existing price subsidies even after the price reductions to further lessen the burden on farmers. The ministry will monitor the execution of the subsidy program and communicate with relevant agencies, including NongHyup, to ensure a stable supply of fertilizers.
Lee Si-hye, Director of Agricultural Industry Innovation Policy at the Ministry of Agriculture, stated, “We expect that the recent reduction in fertilizer prices and the continued support for chemical fertilizer price subsidies will help reduce the purchasing burden on farmers. We will continue to closely monitor the fertilizer supply situation and do our utmost to ensure stable supplies for farmers.”
* This article has been translated by AI.
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