Currency fluctuations help UK farmers on fertiliser price

Published on 03/07/2012 00:00

Although weather problems and other farming costs continue to mount, farmers in Britain will pay less this year for their fertilisers, according to Ken Bowler, marketing manager for GrowHow, the country’s leading manufacturer.

With the season just under way, Bowler said Britain’s growers were paying some 5 per cent less than last year, while their counterparts in mainland Europe were facing 5 per cent higher prices.

Looking forward to the coming season, he predicted currency movements would exacerbate an already volatile global market as the relative strengths of the US dollar, sterling and the euro continued to be in flux.

“A lower opening price has encouraged a brisk start to the fertiliser-selling season with growers ordering at least some of their requirements for the coming year to take advantage of lower prices,” he said.

“The weakness of the euro against the dollar has currently made urea less competitive and this, in turn, is likely to have an effect on the availability of imports as the market turns to ammonium nitrate.”

Illustrating just how much currency movements could affect the cost of producing fertiliser, Bowler pointed to the price movements in urea – one of the main ingredients in compound fertilisers – since September last year.

In dollar terms, it had come back some 15 per cent; in sterling it was back around 7 per cent; whilst in euros, the price had risen about 1 per cent.

The current state of the euro made it difficult to predict how the whole season would develop but he pointed out that other non-currency factors would also have an effect on fertiliser price.

“India is reported to be about to place a very large urea order of over one million tonnes. This will affect the market and availability in the short term.

“While global demand appears to be continuing to increase at around 3 per cent a year, there is talk of increased capacity coming on stream, but some of this keeps being delayed by teething problems during commissioning, and forecasting its effect on pricing remains uncertain.

“Supply is also likely to continue to be affected by availability of gas. For instance, Pakistan has imported far more nitrogen fertiliser than normal due to internal shortages of gas.”