Farm Ireland

Thursday 19 April 2018

Farmers are being 'held to ransom' by fertiliser industry'

The fertiliser market has been labelled dysfunctional. Stock Image
The fertiliser market has been labelled dysfunctional. Stock Image
Darragh McCullough

Darragh McCullough

The IFA has described the EU's fertiliser market as completely dysfunctional and claimed farmers were being held to ransom by Europe's fertiliser industry.

The IFA broadside follows attempts by a number of leading European fertiliser manufacturers to push through price increases over recent weeks.

The price of CAN has increased by at least €30/t since October when delivered bagged CAN was available for €175-185/t.

This week, CAN prices ranged from €205/t to €225/t for bagged product, with most deals being done at €215-225/t.

Buyer groups in the east of the country were doing deals for bulk CAN at over €200/t mark.

There was some confusion regarding urea prices. IFA sources claimed the keenest quotes for bagged urea this week were €280-290/t for bagged product.

However, buyer groups were quoting around €300/t for bulk product, which puts bagged urea at €310-320/t. But industry commentators claimed prices had jumped €60-70/t and were heading towards the €350/t mark.

Prices for NPK compounds such as 18-6-12 and 27-2.5-5 commenced the season at €275/t to €280/t, and moved to €305/t to €310/t this week - 24-2.5-10 is trading at €10/t over these prices.

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Industry sources blamed the hike in CAN on production capacity being taken out by manufacturers because of low demand from June to October last year.

In contrast, the sharp rise in urea prices was attributed to a world market shortage. One insider pointed out that China exported 2m tonnes of urea in 2016 but will import 3m tonnes this year.

However, the IFA's John Coughlan said the price rises were "unjustified" and accused fertiliser manufacturers of abusing their "dominant position".

"The EU Commission must take immediate and decisive action by abolishing all tariffs and duties on non EU-fertilisers imports to restore competitiveness to European agriculture," Mr Coughlan said.

"The dumping of ammonium nitrate at a near 50pc discount onto the export market by one EU manufacturer in order to maintain internal EU prices is further evidence of a non-functioning market," he added.

The IFA maintained that lack of competition in Europe's highly protected fertiliser market enables leading manufacturers to manipulate prices, particularly for CAN and ammonium nitrate (AN), regardless of price movements for the main raw materials.

"The protection afforded to EU nitrogen manufacturers through the imposition of anti-dumping duties and customs tariffs by the European Commission will see EU farmers pay a premium of €50/t to €60/t for AN and CAN," Mr Coughlan said

Although EU wholesale gas prices - which account for 70-80pc of the cost of production of AN and CAN - have increased marginally over the last three years, they have fallen 61pc in overall terms since 2013, the IFA pointed out.

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