Highlights

Farmers buying fertilizer ahead of time Fertilizer companies already at 100 percent capacity Nitrogen fertilizer prices to near-double from 2007 prices    Farmers may plant more of crops that use less fertilizer in 2009

June 13, 2008
  

UK farmers scrambling to buy fertilizer for next crop

    
  

The soaring price of fertilizer is one of the top concerns of UK farmers, said market participants at the Cereals 2008 event in Lincolnshire Thursday (June 12, 2008)

 

"Finding extra borrowing for rising costs for fertilizer will be a bigger problem than farmers expect," said Francis Mordaunt, head of business research at farm consultancy Andersons.

 

Farmers are already scrambling to request credit from banks for their 2009 fertilizer needs when they usually come after the harvest period in September.

 

"Most people usually have the money from their (latest) wheat crop before they buy fertilizer for the coming crop," said Simon Sill, regional agricultural manager for Lloyds TSB.

 

"It's unusual for farmers to be buying up fertilizer at this time of year - it shows how sensitive they are to the rising price," added Sill.

 

Nitrogen fertilizer used in this year's crops was bought mostly in 2007 for, on average, around GBP170 a tonne. This is expected to leap to, on average, around GBP325/tonne for next year's crop, said Andersons.

 

Other commonly used fertilizers such as phosphate and potash are facing similar increases.

 

Mordaunt advised farmers to be forward looking so that they do not have to rush off to the bank at the last minute.

 

Mordaunt said a very conservative estimate would put the cost of UK wheat production at GPP 115 a tonne, as opposed to GBP 97 a tonne in 2008, meaning production costs would rise almost 20 percent.

 

With world grain prices rising sharply throughout 2007, many farmers invested more in fertilizers, driving up demand.

 

"Availability of fertilizers is forecast to remain tight for two to four years - especially in phosphate and potassium," said Dr. Kristian Orlovius, managing director of Potash Limited.

 

Production is struggling to keep up with demand, with most fertilizer suppliers already working at close to 100 percent capacity, added Orlovius.

 

With the crunch on fertilizer supply, UK farmers may switch to crops requiring lesser amounts of fertilizer next year, such as barley, which requires 30-40 percent less fertilizer than wheat.

Said Jonathan Hoyland, barley and oat trader at Frontier Agriculture Limited.