The chemical fertilizer industry has a lot it wants to settle with Sinochem, China's massive state-owned chemical products producer. Despite being one of the world's 500 largest companies, it is still stubbornly opposed to relinquishing its monopoly over the lucrative potassium fertilizer import industry, which it inherited as a state-owned enterprise under the planned economy.

For China's agricultural industry, potassium-based fertilizers are a staple for survival. Even though China's domestic production of it reached a new high in 2006, China still relies on imports to satisfy 67 percent of domestic demand. High-quality fertilizer with 40 percent or higher content of potassium are exclusively sourced from abroad.

Senior industry insiders who wish to remain anonymous say that Sinochem's subsidiary, Sinofert, reaps a net profit of 1,000 yuan per ton of imported potassium fertilizer. With China importing 9 million tons of it this year, this will cost the 900 million farmers who use it an average of 10 yuan each.

Three years ago, the Ministry of Commerce increased the list of those with the power to import potassium fertilizer to ten. But until today, of those ten, only Sinofert and the China Agricultural Resource Group (which is controlled by the China Supply and Marketing Cooperative) have been able to directly import large quantities of potassium fertilizer.

And during the past three years, the price of each imported ton has increased from under 1,000 yuan to more than 2,350 yuan today.

So have the costs to farmers.

Locked Out of the Market

"In these past three years we have been unable to import a single ton of fertilizer," says Chou Guangchun, president of Liaoning West Special Fertilizer, based in Liaoning province. "Even a huge company like Petrochina is helpless." Liaoning West is one of the ten firms that ostensibly has the right to import potassium-based fertilizer.