Notice on Public Solicitation of Comments on the “Administrative Measures for the National Commercial Reserve of Fertilizers (Draft for Comments)”According to relevant work arrangements, we have drafted the “Administrative Measures for the National Commercial Reserve of Fertilizers” and are now soliciting public comments.

The period for publicly soliciting comments is from April 20, 2020, to May 19, 2020. Members of the public are welcome to submit their comments via online platforms, fax, or other means. Please log on to the homepage of the website of the National Development and Reform Commission (http://www.ndrc.gov.cn), navigate to the “Public Solicitation of Comments” section, and enter the column titled “Public Solicitation of Comments on the Draft ‘Administrative Measures for the National Commercial Fertilizer Reserve’” to submit your suggestions and comments. For fax submissions, please send them to 010-68501418.

Thank you for your participation and support!

Attachment: “Administrative Measures for the National Commercial Fertilizer Reserve (Draft for Comments)”

National Development and Reform Commission

April 20, 2020

Attachment: Measures for the Administration of National Commercial Fertilizer Reserves (Draft for Comments)

Chapter 1 General Provisions

 
　　Article 1: To ensure the basic stability of fertilizer supply and prices during the spring plowing season, reduce domestic consumption of potash fertilizer resources, meet domestic demand for potash fertilizer, and address emergency fertilizer needs following natural disasters such as typhoons and floods, thereby establishing a national commercial fertilizer reserve management system that is fully functional, scientifically standardized, and highly efficient in operation, and to regulate the conduct of all relevant parties, these Measures are hereby formulated.
　　Article 2: These Measures apply to the selection, management, supervision, and assessment of enterprises entrusted with the national commercial reserve of fertilizers.
　　Article 3: The national commercial reserve of chemical fertilizers is divided into three components: potash fertilizer, disaster-relief fertilizer, and spring-plowing fertilizer. The varieties of fertilizers in the reserve include nitrogen, phosphorus, potassium, and compound fertilizers.
　　Article 4: The national commercial reserve of fertilizers shall follow the basic principles of enterprise-based reserves, bank loans, government subsidies, market-oriented operations, and self-financing with自负盈亏.
　　Article 5: The National Development and Reform Commission and the Ministry of Finance shall jointly manage the national commercial reserve of fertilizers. The development and reform commissions and finance departments (bureaus) of relevant provinces (autonomous regions and municipalities) shall be responsible for the ongoing and post-event supervision of the national commercial reserve of fertilizers within their respective regions. The relevant supervisory bureaus of the Ministry of Finance shall be responsible for reviewing the enterprises’ storage status and the disbursement of fiscal subsidy funds.
　　Article 6: The national commercial fertilizer reserve task shall be voluntarily undertaken by enterprises, which shall bear their own profits and losses. Enterprises may apply for loans from the Agricultural Development Bank of China or commercial banks to cover the required funds, and the central government finance will provide interest subsidies or fixed-amount grants for these loans.
 
　　Chapter 2: Reserve Scale
 
　　Article 7: The scale of reserves for disaster-relief fertilizers and spring-plowing fertilizers shall be dynamically adjusted in light of the latest annual changes in the application volume of agricultural fertilizers published by the National Bureau of Statistics, while taking into account the overall situation of fertilizer production and import/export. As the scales of reserves for disaster-relief fertilizers and spring-plowing fertilizers decrease, the reserve scale for potash fertilizers will gradually increase to a certain level and remain stable thereafter.
　　Article 8: The proportion of imported potash fertilizer in the potash fertilizer reserve shall not be less than 80%, while all disaster-relief fertilizer and spring-plowing fertilizer reserves shall consist entirely of domestically produced fertilizer.
 
　　Chapter 3: Reserve Time and Layout
 
　　Article 9: Potash fertilizer shall be stockpiled throughout the year. The stockpiling period for disaster-relief fertilizer is from May to October each year. The stockpiling period for spring-plowing fertilizer shall be chosen by the storage enterprise annually from any consecutive six-month period between September of the current year and April of the following year.
　　Article 10: The layout of potash fertilizer and disaster-relief fertilizer reserves shall be determined independently by the enterprises entrusted with storage, in accordance with the following principles: (1) Potash fertilizer reserves shall be prioritized for regions with convenient transportation or major grain and cotton production areas. (2) Disaster-relief fertilizer reserves shall be prioritized for regions prone to natural disasters such as floods and typhoons, as well as for key grain-producing areas, based on patterns of occurrence of these disasters.
　　Article 11: The allocation of spring-fertilizer reserves across provinces (autonomous regions and municipalities) shall be determined through joint efforts by the National Development and Reform Commission, the Ministry of Finance, and the Ministry of Agriculture and Rural Affairs. The determination will be based on an assessment of the national fertilizer market situation and macroeconomic regulation needs, taking into account factors such as local agricultural fertilizer consumption and fertilizer production and transportation capacities. Storage and sales outlets shall be reasonably selected by the enterprises entrusted with storage within the bid-winning areas. Among the spring-fertilizer reserve tasks assigned to the 13 major grain-producing regions—Heilongjiang, Jilin, Liaoning, Inner Mongolia, Hebei, Henan, Shandong, Jiangsu, Anhui, Jiangxi, Hubei, Hunan, and Sichuan—the proportion of urea in the reserves shall not be less than 40% of each region’s total reserve volume; in other regions, the proportion of compound fertilizers shall not exceed 70% of each region’s total reserve volume.
 
　　Chapter 4: Selection of Storage and Custody Enterprises
 
　　Article 12: Enterprises undertaking the national commercial reserve of fertilizers shall meet the following basic requirements: (1) Possess qualification to operate fertilizers within China and the capacity to independently assume civil liabilities.
　　(2) The paid-up registered capital (funds) shall not be less than 50 million yuan; the paid-up registered capital (funds) of the enterprise headquarters or the leading enterprise of the consortium in the previous year shall not be less than 100 million yuan, and the paid-up registered capital (funds) of each participating enterprise in the previous year shall not be less than 30 million yuan. For enterprises located in the Tibet Autonomous Region, Qinghai Province, Gansu Province, and the Ningxia Hui Autonomous Region that undertake reserve tasks within their respective regions, the paid-up registered capital (funds) in the previous year shall not be less than 10 million yuan.
　　(3) Fertilizer distribution enterprises must have an average annual sales volume of over 200,000 tons over the past three years; fertilizer production enterprises must possess a sales network and have an average annual output of over 150,000 tons of single-element fertilizers or over 400,000 tons of compound fertilizers over the past three years. Fertilizer production and distribution enterprises may form consortia, provided that each participating enterprise within the consortium meets the above-mentioned requirements. Enterprises located in the Tibet Autonomous Region, Qinghai Province, Gansu Province, and the Ningxia Hui Autonomous Region may, at their discretion, relax these requirements.
　　(4) Potash fertilizer storage and custody enterprises must be state-owned or non-state-owned trading enterprises that import chemical fertilizers.
　　(5) Disaster relief fertilizer storage and distribution enterprises in riverside and coastal areas must have a relatively well-developed distribution network.
　　(6) Spring-farming fertilizer storage enterprises shall have an average annual sales volume over the past three years within the target area that is no less than 1.2 times the quantity bid by the enterprise.
　　(7) Fertilizer production enterprises comply with the state’s industrial policies, their products meet national quality standards, and their energy consumption meets national requirements. Fertilizer distribution enterprises procure fertilizers exclusively from the aforementioned fertilizer production enterprises.
　　(8) Possess warehousing capacity that is commensurate with the required reserve scale and regional deployment.
　　(9) In undertaking the tasks related to the former “Central Disaster Relief Fertilizer Reserve,” “Off-Season Commercial Fertilizer Reserve,” “National Potash Fertilizer Reserve,” or relevant provincial-level fertilizer reserve programs, no instances have been reported in which subsidies were fraudulently obtained through falsification or other improper practices and subsequently dealt with by the competent authorities.
　　(10) Not listed on the joint punishment list for illegal and untrustworthy behavior.
　　Article 13: The National Development and Reform Commission and the Ministry of Finance shall entrust bidding agencies to determine the enterprises responsible for storing the national commercial fertilizer reserves through open bidding, invitation bidding, and other appropriate methods.
　　Article 14: Potash fertilizer and disaster-relief fertilizer reserves shall be procured through a joint bidding process based on the total reserve volume. The entity responsible for storage shall be a single enterprise, which will undertake both reserve tasks upon winning the bid. Bidding shall take place every four years. In principle, the top two bidders according to the evaluation ranking shall be selected. If the total quantities requested by the top two bidders do not exceed the overall reserve capacity, the reserve tasks shall be allocated according to each bidder’s requested quantity. Any remaining reserve tasks shall be assigned in order of descending evaluation scores. If the total quantities requested by the top two bidders exceed the overall reserve capacity, each bidder’s reserve task shall be allocated proportionally based on their respective evaluation scores.
　　Article 15: The standard reserve quantity for spring fertilizers is generally 50,000 tons per individual lot, and tenders are conducted every two years.
　　Article 16: The tender notice shall be published on the China Tendering and Bidding Public Service Platform and other relevant media, such as national specialized websites for fertilizers. The list of shortlisted winning bidders shall be published on the same media that released the tender notice.
　　Article 17: The winning bidder shall undertake the reserve task within the validity period of the tender (4 years for potash fertilizer and disaster-relief fertilizer, and 2 years for spring-plowing fertilizer; the same applies hereinafter). Upon expiration of the current term, the state will re-organize a tender to select the next batch of enterprises responsible for storage.

　　Chapter 5: Task Assignment and Management

　　Article 18: The National Development and Reform Commission and the Ministry of Finance shall issue reserve tasks based on the bidding results, clearly specifying the names of the winning enterprises, the types of reserves, the quantities, and other relevant details. A copy of the document shall be sent to the Ministry of Industry and Information Technology, the Ministry of Agriculture and Rural Affairs, the All China Federation of Supply and Marketing Cooperatives, the Agricultural Development Bank, and the relevant supervisory bureaus of the Ministry of Finance. Specifically: (1) The spring plowing fertilizer reserve tasks shall be issued to the development and reform commissions and finance departments (bureaus) of the relevant provinces (autonomous regions and municipalities). The development and reform commissions and finance departments (bureaus) of the relevant provinces (autonomous regions and municipalities) shall promptly notify the winning enterprises. (2) The potash fertilizer and disaster relief fertilizer reserve tasks shall be directly issued to the winning enterprises.
　　Article 19: Enterprises entrusted with the storage of potash fertilizer and disaster-relief fertilizer shall clearly demarcate and label their reserve inventories of potash fertilizer and disaster-relief fertilizer from commercial inventories. The storage warehouses shall be marked with the sign “National Commercial Fertilizer Reserve Warehouse (Potash Fertilizer/Disaster-Relief Fertilizer).” After releasing reserves during the reserve period, enterprises must promptly replenish the inventories in strict accordance with the prescribed timeframes. When disaster-relief fertilizer is released, it must be clearly labeled with the mark “National Commercial Reserve Disaster-Relief Fertilizer.”
　　Article 20: During the reserve period, if macroeconomic regulation requires it or in the event of special circumstances such as major natural disasters, the state may designate relevant enterprises to exercise priority purchase rights over the reserved fertilizers. The enterprises entrusted with storage shall ensure an adequate supply of goods and timely delivery, and the settlement price shall not exceed the average market price of the same type of fertilizer prevailing locally at that time. The Ministry of Finance will disburse interest subsidies to the entrusted storage enterprises based on the actual duration of storage.
　　Article 21: Potash fertilizer storage enterprises shall independently determine the timing of release and replenish their inventories within 30 working days after the release.
　　Article 22: When applying to utilize disaster relief fertilizers, the Development and Reform Commissions of relevant provinces (autonomous regions and municipalities), in coordination with the agriculture and rural affairs departments, shall submit a request for utilization to the National Development and Reform Commission based on the impact of disasters such as floods and typhoons on local agricultural production. The National Development and Reform Commission will promptly issue instructions to the storage enterprises regarding the allocation of disaster relief fertilizers and may, depending on local disaster relief needs, allocate some potash fertilizers as well. The storage enterprises shall...
　　Immediately mobilize disaster relief fertilizer and deliver it to the affected area within 3 days, then replenish inventory within the following 7 working days.
　　Article 23: During the reserve period for disaster relief fertilizers, prices to be applied in disaster-stricken areas shall be as follows: (1) For urea and compound fertilizers, the prices shall be those of “urea (small granules)” and “compound fertilizer (potassium sulfate compound fertilizer with 45% nitrogen, phosphorus, and potassium content)” respectively, as published most recently in the “Price Changes of Key Production Materials in Circulation” report released by the National Bureau of Statistics. (2) For phosphate fertilizers and potash fertilizers, the prices shall be the wholesale prices monitored most recently by the All China Federation of Supply and Marketing Cooperatives.
　　Article 24: The national commercial reserve of fertilizers is intended solely for meeting the needs of domestic agricultural production and may not be used for export. Any fertilizer intended for export shall not be eligible for preferential policies such as subsidized interest rates on loans or fixed-amount subsidies.
 
　　Chapter 6: Fulfillment and Assessment of Reserve Tasks
 
　　Article 25: If a spring-plowing fertilizer storage and custody enterprise fails to complete its reserve task within the reserve period, the Development and Reform Commission and the Department of Finance (or Bureau) of the province (autonomous region or municipality) where the enterprise is located shall jointly report the relevant situation to the National Development and Reform Commission and the Ministry of Finance. The National Development and Reform Commission and the Ministry of Finance may, based on the most recent bidding rankings, reallocate the unfulfilled reserve tasks within the same region; if reallocation within the region is not feasible, the tasks may be allocated to neighboring regions. The local supervisory bureau of the Ministry of Finance shall review and approve the disbursement of fiscal subsidy funds in accordance with the adjusted reserve tasks. If a joint storage and custody enterprise for potash fertilizer and disaster-relief fertilizer fails to complete any of its reserve tasks during the reserve period, the National Development and Reform Commission and the Ministry of Finance may, based on the most recent bidding rankings, reallocate the unfulfilled reserve tasks once again.
　　Article 26: Spring plowing fertilizer storage and custody enterprises shall be assessed annually according to the following indicators:
　　(1) During the reserve period, the cumulative volume of goods drawn into the target area shall be no less than 1.2 times the annual storage assignment volume.
　　(2) During the reserve period, the end-of-month inventory levels for each of the final three months shall be no less than 50%, 80%, and 110% respectively of the contracted storage target quantity.
　　(3) The quantity of fertilizers drawn in by production enterprises refers to the amount of fertilizers produced within the designated storage and custody area or within the region under custody, where ownership has not been transferred. The inventory quantity represents the total fertilizer stock held by the enterprise at all storage locations (including factory premises) within the designated storage and custody area. If a production enterprise is located outside the target area, the inventory quantity held within its factory premises shall not be included in the overall inventory quantity.
　　(4) For storage enterprises storing multiple varieties, each variety shall be assessed separately. If a single variety fails to meet the assessment requirements, the enterprise shall be deemed to have failed the assessment for all varieties.
　　Article 27: Potash fertilizer and disaster-relief fertilizer storage enterprises shall be assessed annually based on a daily average inventory level within the customs territory that is no less than the assigned storage quota.
 
　　Chapter 7: Financial Management
 
　　Article 28: Enterprises undertaking the storage of spring-farming fertilizers may apply for loan support from the Agricultural Development Bank of China or various commercial banks. On the premise of adhering to credit policies and ensuring fund security, each bank shall provide preferential and convenient credit support based on the risk tolerance of the storage enterprises, according to the duration of the reserve period, and the storage enterprises shall repay principal and interest on time. The Agricultural Development Bank of China shall provide policy-based credit support to enterprises storing potash fertilizers and disaster-relief fertilizers.
　　Article 29: The central finance shall provide interest subsidies or fixed-amount grants for loans according to the following standards.
　　(1) A fixed-amount subsidy shall be provided to potash fertilizer storage enterprises. The subsidy rate shall be determined based on the lowest bid among the winning bidders and shall not exceed the current level.
　　(2) Subsidies with interest rate discounts shall be provided to enterprises that store disaster relief fertilizers and spring plowing fertilizers. The subsidy standards shall be determined at 50% and 100% respectively of the one-year quoted interest rate for the loan market, based on the value of the stored goods, the duration of storage, and the loan market’s one-year quoted interest rate.
　　Article 30: The value of stored fertilizers for disaster relief and spring plowing tasks shall be determined by averaging the prices of each fertilizer variety as follows:
　　(1) Urea and compound fertilizers shall be priced according to the “Prices of Key Production Materials in Circulation” published every ten days by the National Bureau of Statistics during the reserve period, specifically referencing the prices for “Urea (small granules)” and “Compound Fertilizer (potassium sulfate-based compound fertilizer with 45% nitrogen, phosphorus, and potassium content).”
　　(2) Phosphate fertilizers shall be priced according to the “diammonium phosphate wholesale price” published weekly by the Supply and Marketing Cooperative General Association during the reserve period.
　　Article 31: Within 20 working days after the end of the annual reserve period, the storage enterprise shall prepare and submit to the relevant authorities a report on the national commercial fertilizer reserve operations, based on the reserve status. This report shall be accompanied by all types of inbound and outbound documents, transportation receipts, and supporting documentation required for applying for subsidy funds, and the enterprise shall assume responsibility for the authenticity of such materials. Among these:
　　(1) Enterprises responsible for storing disaster relief fertilizers and potash fertilizers shall report to the Ministry of Finance.
　　(2) Enterprises responsible for storing spring-farming fertilizers shall submit their reports to the finance departments (bureaus) of the provinces (autonomous regions, municipalities) where they are located. After receiving the relevant materials, the finance departments (bureaus) of the respective provinces (autonomous regions, municipalities) shall compile the information within the prescribed time limits and formally submit a written document to the Ministry of Finance requesting the disbursement of funds.
　　Article 32: The financial authorities shall disburse subsidies for the national commercial fertilizer reserve funds in accordance with relevant provisions such as the Budget Law. Subsidies for central enterprises shall be directly disbursed by the Ministry of Finance, while subsidies for local enterprises shall be transferred by the central finance through local finance departments. Upon receiving the subsidy funds disbursed by the central finance, local finance departments shall remit these funds to the storage and custody enterprises within 30 days, and shall not delay, withhold, or divert the interest-subsidy funds. They shall also accept supervision from the local supervisory bureau of the Ministry of Finance.
 
　　Chapter 8: Supervision and Management
 
　　Article 33: After the reserve work commences, each enterprise responsible for storage shall, within the first 10 working days of each month, submit to the relevant authorities a report on the status of reserve operations based on the reserve tasks assigned to its enterprise. Among these:
　　(1) Potash fertilizer and disaster-relief fertilizer storage enterprises shall submit reports to the Beijing Regulatory Bureau of the Ministry of Finance, with a copy sent simultaneously to the National Development and Reform Commission, the designated agency of the Ministry of Finance, the Ministry of Agriculture and Rural Affairs, the All-China Federation of Supply and Marketing Cooperatives, and the lending banks.
　　(2) Enterprises responsible for storing and distributing spring-farming fertilizers shall submit reports to the relevant supervisory bureau of the Ministry of Finance, with a copy sent simultaneously to the Development and Reform Commission and the Department (Bureau) of Finance of the province (region or city) where they are located, as well as to any agency designated by these two authorities, the Department (Commission) of Agriculture and Rural Affairs, the Supply and Marketing Cooperatives, and the lending banks.
　　Article 34: The state shall establish a dynamic monitoring mechanism for the management of the commercial fertilizer reserve.
　　(1) The National Development and Reform Commission and the Ministry of Finance, together with the All China Federation of Supply and Marketing Cooperatives and the lending banks, shall be responsible for overseeing the reserves of potash fertilizer and disaster-relief fertilizers. Within the four-year bidding validity period, they shall ensure comprehensive supervision and inspection of all reserve storage locations.
　　(2) The Development and Reform Commissions and Finance Departments (Bureaus) of the relevant provinces (autonomous regions and municipalities), in collaboration with supply and marketing cooperatives and lending banks, shall be responsible for overseeing the spring fertilizer reserves within their respective regions. During the two-year bidding validity period, they shall conduct comprehensive supervision and inspection of all reserve storage locations, starting each year after more than half of the spring fertilizer reserve period has elapsed.
　　(3) Within 10 working days after the end of the annual spring plowing fertilizer reserve period, the Development and Reform Commissions and Finance Departments (Bureaus) of the relevant provinces (autonomous regions, municipalities) shall report the supervision and inspection results for this reserve period to the National Development and Reform Commission and the Ministry of Finance, with a copy sent simultaneously to the Ministry of Finance (relevant regulatory bureaus) and the All-China Federation of Supply and Marketing Cooperatives. Should any other significant issues be identified during the supervision and inspection, they shall be reported promptly. The results of the supervision and inspection serve as an important reference for assessing the completion of the reserve task but shall not be used as the basis for disbursing fiscal subsidy funds.
　　Article 35: After the expiration of each bidding validity period, the relevant regulatory bureau of the Ministry of Finance shall audit the enterprise’s storage capacity and the disbursement of funds. Among these:
　　(1) The Beijing Regulatory Bureau of the Ministry of Finance is responsible for reviewing enterprises that are entrusted with storing disaster relief fertilizers and potash fertilizers.
　　(2) The local supervisory bureau of the Ministry of Finance is responsible for reviewing fertilizer storage enterprises in this region that are engaged in spring plowing operations. After completing the review, the relevant supervisory bureau of the Ministry of Finance shall promptly report the review results to the Ministry of Finance, which will then settle the disbursement of funds based on these results.
　　Article 36: During the reserve period, if a storage and custody enterprise fails to meet the reserve targets for any of the following reasons—not due to force majeure—such failure shall be deemed as a failure to complete the reserve task. The central government will not provide financial subsidies, and any subsidies already disbursed will be recovered. Furthermore, the enterprise will be barred from participating in national commercial fertilizer reserve tasks for the duration of three bidding periods.
　　(1) Unauthorized replacement or adjustment of reserve varieties, quantities, and other related items without consent.
　　(2) Failure to report reserve data and status as required.
　　(3) The reported data and circumstances have been found to significantly deviate from the actual situation.
　　(4) Failure to meet the assessment targets.
　　Article 37: If a storage and custody enterprise encounters any of the following circumstances, the central government will not provide financial subsidies; any subsidies already disbursed will be recovered. Such enterprises shall also be barred from participating in future national commercial fertilizer reserve programs. Relevant actions will be referred to the competent authorities for handling in accordance with laws and regulations.
　　(1) Engaging in fraudulent activities to fraudulently obtain reserve subsidy funds.
　　(2) Misappropriating reserve loans for other purposes.
　　(3) Fertilizers released onto the market upon expiration of their reserve period were found through testing by relevant authorities to be counterfeit or substandard, with actual content and weight failing to meet the specified standards.
　　Article 38: The materials and forms that storage enterprises are required to submit on schedule, as well as the formats of reports and forms generated by supervision and inspection conducted by relevant departments, shall be uniformly formulated and issued by the National Development and Reform Commission and the Ministry of Finance.
 
　　Chapter Nine: Supplementary Provisions
 
　　Article 39: These Measures shall be interpreted by the National Development and Reform Commission and the Ministry of Finance. Each region may, in light of its local conditions, formulate specific implementation rules or implementation plans.
　　Article 40: These Measures shall take effect as of the date of [month] 2020. The “Administrative Measures for Central Disaster Relief Reserve Fertilizers,” jointly issued by the former State Planning Commission and the Ministry of Finance (Document No. 577 [1999] of the Planning and Economic Trade Department), as well as the “Administrative Measures for Commercial Reserve of Fertilizers during the Off-Season,” jointly issued by the National Development and Reform Commission and the Ministry of Finance (Order No. 26 of the National Development and Reform Commission and the Ministry of Finance), and the “Supplementary Provisions to the Administrative Measures for Commercial Reserve of Fertilizers during the Off-Season” (Document No. 2251 [2005] of the National Development and Reform Commission and the Ministry of Finance) shall be repealed concurrently.