Fertiliser rise piles on pressure
Fertiliser price hikes expected in January are set to add to the financial woes of farmers who have already suffered sharp increases in feed and energy.
Price increases of up to €25/t have been mooted for urea in 2013, while CAN and compound fertiliser could rise by €5-10/t, fertiliser compounders have forecast.
While official price lists have not yet been confirmed, the predicted hikes would push urea to a farmer price of €450-465/t. However, a farmer price for CAN is less definite, with quotes ranging from €335 to €350/t for the new year.
The price gap between compound fertilisers like 18-6-12 and 27-2.5-5 is expected to be close, with prices of €435-450/t forecast for both in early 2013.
The increases will pile added pressure on farmers who have already shouldered a 7pc hike in tillage fertilisers and a 3pc increase in grassland fertiliser during 2012.
Livestock farmers in particular have suffered high input costs and feed bills for much of 2012. Average feed bills on grassland farms jumped by 15-25pc in the past 12 months as feed prices rose by 7pc to €305/t on average.
International prices for urea have risen by €20/t in the past fortnight as competition for limited supplies increased. A new export tax on urea produced in Egypt, amounting to $90-100/t, is set to severely limit the supply of urea to Europe.
"This will mean a €10-15/t increase on many fertiliser products and on urea it could be a good bit more," commented one Irish fertiliser supplier. "But it looks like getting urea could be a bigger issue than price."
Teagasc economist Trevor Donnellan said there was no prospect of any fertiliser price reductions in 2013 as global energy and commodity prices remained high. He added that the high cereal plantings around the world were putting a floor underneath fertiliser prices.
The economist predicted price increases of up to 7pc for fertiliser in Ireland next year, depending on the type of fertiliser being bought.
However, agricultural consultant Pat Minnock said he couldn't see fertiliser prices rising dramatically in the spring because supply and demand factors would come into play in setting prices.
"Tillage farmers will have to examine the economics of growing cereals and they have already cut back on their winter sowings," he said.
Teagasc dairy expert John Donworth maintained that high chemical fertiliser prices would prompt farmers to make better use of slurry and use their chemical nitrogen more sparingly.
"At high prices, farmers will not want to waste their nitrogen," he said.
Cash-flow pressure on farms and throughout the supply chain, caused by a surge in demand for animal feed, means that very little fertiliser has been bought forward by either farmers or merchants yet.
Last year, around 290,000t of nitrogen (N) and 80,000t of potassium (K) was sold by Irish fertiliser compounders.
"Fertiliser has been put on the long finger by farmers and merchants because all the money has been spent on feed," said one merchant. "There just hasn't been cash left over to forward-buy their fertiliser."