Until 1989, the fertilizer industry and the fertilizer distribution system were elements of the centrally planned economy, with the sales monopolized by the 'Agrochem Company'. Most of the domestically produced and imported (potassium salts) fertilizers were distributed centrally among the provinces and channelled by Agrochem either directly to the state farms or to the marketing cooperatives, which had outlets in each commune (the smallest administrative unit covering a few to several villages). This system collapsed within a few months after introduction of the market-oriented system in 1989/1990. Most of the marketing cooperatives went bankrupt and the Agrochem Company was partly dissolved and partly privatized. The fertilizer market was in total confusion with few entrepreneurs seeking an easy profit and a crowd of farmers queuing for fertilizers at the factory gates. The prices rocketed to the rate 5 to 7 kg of wheat grain for 1 kg of nutrient and fertilizers were practically inaccessible for most farmers. Large fertilizer plants were fighting for survival. They began to export fertilizers and to rebuild the distribution channels in a market driven way.
In 1991/92 the wholesale centres and dealer networks were implemented and each big producer established uniform factory prices for the whole country. The details of trading policies are not revealed but it is believed that most of the large factories (Table 9) are selling almost equal amounts of fertilizers through their own dealers network and through wholesale centres. In the case of one factory only, almost the total production is sold through its own dealer network. Today more than 3 000 retailers, connected with the main producers, are active on the fertilizer market, which intensifies the competition for the clients.
For farmers, the prices of fertilizers are the same at the factory gate and at the local retailer level due to the discounts given by the producers to the distributors. The usual margin of profit offered to retailers is 5 to 10 percent of the fertilizer value. The payment system for delivered fertilizers is very flexible. In the case of the wholesaler the immediate remittance system is commonly used but in the case of dealers the payment is executed when the dealer acquires the dues from the farmer.
During the past four years the State has intervened slightly on the fertilizer market through preferential credit offered to farmers. The credit for purchasing the fixed amount of fertilizers at a low interest rate (half of the normal rate) is available for the period from planting to harvest. The amount of money secured for this kind of credit by the banks is, however, limited and only partly satisfies the farmers demand.
