Farmers who have been holding off on buying fertiliser in the hope values will fall have been advised to take a look at European gas price forecasts – and think again.
UK fertiliser prices are currently four to five times higher they were a year ago, so it’s no surprise manufacturers are not seeing traditional farm buying patterns, but they warn that delayed orders could lead to supply and delivery issues if growers delay too long.
Joe Gilbertson, head of fertilisers at the Agricultural Industries Confederation (AIC), the body which represents importers, manufacturers and merchants across the UK, described the current situation as “a Mexican standoff”.
“No manufacturer is going to produce fertilisers at high gas prices when farmers are putting off making decisions as they risk being left with a massive stockpile if the price subsequently prices come down.
“Meanwhile the market is slowing and we are concerned that farmers may be delaying hoping things will get better,” he said.
“The danger is if they choose to place an order later we might not be able to meet demand because the logistics of supply are a bit like petrol- if everyone buys it regularly there’s never a problem with supply, but if everyone rushes to buy we risk running out.
”I don’t want to panic everyone, but we’re in an unknown situation.
“If there’s a rush to place orders because everyone leaves it late, people who are holding off may be very disappointed.”
Pete Smith, the commercial director of Yara UK and Ireland, a dominating forces in the market, pointed out that gas futures values in Europe remain high, and a sharp spike over the Christmas period meant the company stopped manufacturing for two weeks.
He said: “If gas remains high, you’ll have a lot of European fertiliser manufacturers looking at the viability of producing fertiliser because if they can’t achieve the values at farm level clearly they’ll look to reduce production.
“Yara have forecast volumes for this calendar year and will bring in product to satisfy that – unless we see another big spike in gas prices.”
Mr Smith agreed some growers were waiting until the last minute on the off-chance prices might come down.
He added: “If they all sit on their hands, there’s nobody going to be building up high levels of stock, and haulage is becoming more and more difficult to secure, which means we and our competitors can only deliver so much product each month. We are now taking orders for February.”
Mr Smith also pointed out that the February 14 deadline, when the NVZ window opens up and fertiliser can be applied to crops, is only four weeks away.
“If we have a dry period between now and then farmers will be desperate to get out and apply fertiliser because winter crops been sown in exceptional conditions and are looking fantastic,” he said.
“To maximise returns you want to get the nutrients on as soon as possible.”