time will be the decider, page-2

Price rises and shortages could cause fertiliser crisis




By Dan Buglass
THE price of gold on the international markets has risen dramatically in recent weeks as equity values remain volatile. The cost of agricultural fertilisers has also shot up to the extent that compounds are now priced at around £300 per tonne, but availability is decidedly limited and some farmers may find it difficult to secure sufficient supplies.
However, the outlook is now even more obscure in view of the recent announcement by the Chinese government of the imposition of a 35 per cent tax on exports of granular urea – a valuable, and formerly relatively cheap source of nitrogen, for farmers all around the world. According to Gleadell, one of the leading traders on the UK market, this is likely to result in a price hike of up to $30 per tonne in the next round of tenders.

Calum Findlay, the company's lead fertiliser trader, said: "US inventories will be low by June, so buying intentions for increased crop plantings will be high. This, plus a demand from India for 4.5 million tonnes by December, is causing a certain amount of panic in Europe as we approach the early summer buying period.

"With the UK now requiring a minimum close to 500,000 tonnes of imported nitrogen, of which up to 400,000 tonnes will be urea, and the closure of a major plant on the Severn, this will cause tremendous logistical problems due to a lack of storage near deep-sea facilities."

The cost of both phosphate and potash is also on the rise, with predictions of an increase of $70 per tonne for June contracts in the wake of the Russian 5 per cent export levy. Gleadell is advising farmers to place orders for all fertilisers early to avoid both disappointment and the prospect of even higher prices.

The continuing weakness of sterling against the euro is proving to be a considerable boon to livestock exporters, particularly in the beef and sheep sectors, but it is making life much more difficult for arable farmers. In addition to the soaring cost of fertiliser, very little of which is now manufactured in the UK, new machinery from the eurozone is now much more expensive.