By intern reporter Zhang Yanling

China, the world's largest grain producer, has raised export taxes on fertilizer to ensure supplies and prices in domestic market.

According to a government statement released on August 30, export duties on nitrogenous fertilizer and ammonium will rise to 150 percent from the current 100 percent, effective from September 1 to December 31.

Meanwhile, a 100-percent levy on other fertilizers, which was set to impose from April 20 to September 30, will be extended to December 31.

According to the statement, China will also impose temporary tax on exports of plant or animal-based fertilizer (excluding guano) at 460 yuan per ton from September 1 to December 31.

The prices of fertilizes have seen a surge as raw material prices are rising, including coal and natural gas. However, the prices of fertilizers in China's domestic market have been much lower than the international prices, due to the government controls. The widening price gap has triggered Chinese fertilizer manufacturers to increase export while cutting domestic supply.

To ensure the domestic supply and regulate exports, the government first imposed export tax on some categories of fertilizer products in June 2007, and has extended the levy and raised the tax rates several times since then.

However, Caijing learned that the previous tax rates increases have limited impacts on fertilizer exports, while the domestic prices have been rising despite government controls. For instance, the price of phosphor ammonium has grown to 4,100 yuan per ton in the spring of 2008, from 1,900 yuan per ton in 2007.

Industry analysts expect more tax hike on fertilizers and related raw materials in the future in an aim to guarantee domestic supply.

1 yuan = 14 U.S. cents