6 Jun 2022 16:07

Russian producers of nitrogen fertilizer could index prices for domestic market below inflation

MOSCOW. June 6 (Interfax) - Russia's Federal Anti-monopoly Service (FAS) has approved guidelines on developing commercial and sales policy for the producers of nitrogen and nitrogen-containing fertilizer, the watchdog said in a statement.

The FAS has recommended that producers develop a commercial and sales policy that sets price ceilings for these types of fertilizer on Russia's domestic market, based on the average price for May-July 2021, and indexed below the inflation rate. The producers are recommended to coordinate drafts of the commercial policy preliminarily with the FAS.

The recommended maximum mark-up is set at no more than 5% for fertilizer distributors, who are encouraged to provide farmers with reports on the actual price and volume of purchases, on the final margin, and on the storage and transportation costs of fertilizer. If distributors do not provide this information, then farmers have the right to terminate agreements with them.

Fertilizer prices were frozen on the domestic market in July 2021 amid solid growth on export markets. The government at the end of last year approved the procedure for concluding agreements on supplying nitrogen and complex nitrogen-containing fertilizer to Russia's regions at fixed prices. The agreements were valid until May 31, 2022, and they fixed the supply volumes and the price ceilings at no higher than the average price in May-July 2021, under terms and conditions of FOB origin.

Fertilizer producers have requested the possibility to index prices for the domestic market to the level of inflation starting in July, a source familiar with the discussions told Interfax.

Russia has also imposed quotas on fertilizer exports since December 2021. The quotas were initially valid until May 31, when the government extended them as of July 1 to December 31, 2022, leaving an export window in June owing to weak demand. The quota is to be about 8.3 million tonnes for nitrogen fertilizer, and just over 5.9 million tonnes for complex fertilizer.

The government commission on matters concerning the country's agro-industrial complex and sustainable rural development, as chaired by Deputy Prime Minister Victoria Abramchenko, supported extending the measures to curb price rises for fertilizer until May 31, 2023, Abramchenko's press service said on Monday. Support is foremost for customs and tariff measures, as well as for export quotas, the press service explained to Interfax.