Thursday, March 12, 2009

Thank God for fertiliser competition

Yet again it has been brought home to us here how vital competition in the fertiliser market is with the grumblings coming from UK farmers about the monopolistic industry there.

The latest fall in nitrogen prices in Britain has been met with contempt by farmers who ordered early and are now footing an expensive bill for their trouble.

UK Farmer's Weekly reported many farmers had a perception that the UK fertiliser industry in the form of Growhow UK has excessively profited at their expense - a serious charge, but probably not that far wrong.

Growhow marketing manager Ken Bowler denied the monopoly his company enjoyed had caused the high prices, saying while Growhow was the one remaining manufacturing supplier they still have to compete with opportunistic sellers.

But farmers do feel cheated and it serves to remind us how lucky we are to have Ravensdown and Ballance battling it out for market share. It's true fertiliser prices have been high this season due to international prices - this is not a problem British farmers face alone.

Here we grew wheat when Urea was $1100/tonne and now we could grow that same wheat for $690/tonne. But unlike our English counterparts we can afford to be pragmatic about it, knowing that with the competition in our industry the co-operatives have to bring the prices down as quickly as they possibly can and not drag their feet for extra profit share as seems to be happening with Growhow.

Currently the UK depends on 60% of its fertiliser from imports so it could benefit immensely from having more competition.

Here are the current UK fertiliser prices for March 2009 (£/t delivered):

UK SP5 34.5% N

Imported urea Imported AN (full analysis)

Granular(dependent upon quality)

All illustrated prices are based upon 24t loads for cash payment the month following. Prices for smaller loads and 50kg bags will vary considerably.

For further information go to:

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