Farmers facing fertiliser price surge

Farmers wanting to buy next season's fertilisers look as if they may be in for a shock when the price is announced. Yesterday the biggest fertiliser company in Europe, Yara, announced their early season prices for ammonium nitrate for France and the Benelux countries.

Farmers may have been hoping for a figure of around 250 per tonne but, if the mainland Europe figures are brought over to the UK, the price could well be in excess of 300 per tonne.

Meanwhile, in Edinburgh, yesterday, the largest independent fertiliser manufacturing company in the UK, GrowHow, was emphasising just how the recent rise in the global price of urea will affect its early season pricing for ammonium nitrate when it is announced next week.

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Ken Bowler, GrowHow's marketing manager, said that the price of urea, the most commonly used nitrogenous fertiliser in the world, had risen $200 a tonne in the past 12 months.

Part of the urea price hike is due to increased demand throughout the world with a long term 4 per cent year-on-year rise in the usage of nitrogenous fertilisers. The UK is a small player in the world market using only about 2 million tonnes of nitrogen but even here, the tonnage has risen as producers aim to increase their outputs.

In looking at the world demand for food and therefore fertilisers to produce the food, he remarked that in order to keep up with world wide demand six new fertiliser plants require to be built every year.

He did not expect any of those to be built in western Europe as it was essential to build such factories close to where the main source material was being mined or produced.

Mike Baxter, sales director with GrowHow, whose last year's turnover reached 315 million and which turned in a 31m profit, said that even if the price of nitrogen rose further, producers would still use it, as the financial benefits from doing so far outweighed the input costs. In fact, he pointed out the current ratio between cereal prices and nitrogen prices was better than it has been for much of the past decade.

It was a different matter with the other two main ingredients of modern fertilisers, potash and phosphates, where farmers could cut back without seeing an immediate and correlated decrease in yield.