Taiwan Fertilizer Co (台肥), the nation's largest fertilizer producer, yesterday sought to calm a public outcry over its recent price hikes by saying the adjustments were necessary to make the company more profitable and more accountable to its shareholders.
The company, which provides 75 percent of the nation’s fertilizer, raised prices for assorted fertilizers by an average of 40 percent on May 30, prompting hundreds of farmers from southern Taiwan to stage a protest last week.
STOCKPILE
Taiwan Fertilizer became embroiled in further trouble after an employee was recently found hoarding a stockpile of fertilizer equal to 30 percent of demand from Yunlin County.
The company, in which the government controls a 24 percent stake, fired the employee, surnamed Chiu, on Monday evening after launching an internal probe that is still under way.
Byron Hsu (許繼文), Taiwan Fertilizer’s executive vice president, told a media briefing yesterday that the company had no choice but to raise fertilizer prices to reflect skyrocketing raw material costs.
The company lost NT$312 million (US$10.28 million) from selling fertilizers last year, but posted an annual operating income of NT$303 million, thanks to chemical and rental revenues.
“The steep increases in raw material prices and a freeze in fertilizer prices have driven several competitors to exit the market,” Hsu said. “But the more fertilizer the company sells, thebigger the deficit it accumulates from the trading.”
By adjusting fertilizer prices, Taiwan Fertilizer is hoping it can achieve a 5 percent return on fertilizer investment for this year, Hsu said.
STOCKS DROP
Shares of Taiwan Fertilizer closed limit-down on the Taiwan Stock Exchange yesterday, losing 6.79 percent to close at NT$130.5. The stock has surged 63.95 percent since the beginning of the year.
Nancy Liu (劉國瑛), general manager of the company’s procurement department, said the price of urea, a key fertilizer component, has risen from US$236 a tonne in September 2004 to US$680, exceeding the company’s projection of US$630 for the second half of this year.
Liu said it used to cost US$24 to import a tonne of sulfuric acid, another fertilizer ingredient, but the price has increased to US$150 per tonne.
As the nation has no fertilizer resources, it has to import all raw materials, she said.
Despite the rising material and shipment costs, Taiwan Fertilizer had not adjusted its fertilizer prices between August 2004 and last month, in line with government policy.
The company, privatized in September 1999, still needs to consult the Cabinet’s Council of Agriculture for any change in domestic fertilizer prices.
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