The implications of the substantial hike in fertiliser prices are likely to last well into next season according to consultancy business Promar International.
“We are seeing a perfect storm for fertiliser prices with a number of factors combining globally to push prices up,” comments Emma Thompson, Promar’s Information and Insights manager. “Prices for ammonium nitrate (AN), potash and phosphate have all risen sharply with no signs of a readjustment on the horizon. Farmers can reduce the consequences for their business if they take steps now to implement the measures to improve fertiliser use.”
She says global increases in gas prices have contributed to the rise in fertiliser prices, driving up production prices and leading to major manufactures reducing production or closing plants. Yara have reduced AN production by 40% across Europe while CF Fertilisers who produce 1.5M tonnes of AN per annum, equivalent to 40% of UK requirements, closed both their plants in the UK.
“The Government has intervened to get CF to commence production again, primarily to avoid a crisis in carbon dioxide production. This support is only for three weeks and there is no guarantee that production will continue after then, unless there is a massive increase in CO2 prices.
“George Eustice suggests that these need to rise by 500% so a question mark remains about CF remaining open. Even if they do, fertiliser prices are unlikely to fall back.”
Mrs Thompson says that AN prices are now £1.38/kg compared to £0.63/kg last year. Urea prices are also significantly higher. Phosphate has risen from £0.54/kg to £1.02/kg while potash is running at £0.65/kg, up from £0.41/kg.
“Farmers need to plan for higher costs. While global gas prices are high, AN production is likely to be cut back increasing demand with reduced supply. Imported supplies are also under pressure as plants across Europe cut back. At the same time, UK farmers had been holding back on ordering fertiliser due to higher prices in the summer, meaning orders for only around 50% have been placed for 2022 crops compared to normal levels.”
Mrs Thompson says the consequences at farm level could be marked. For the average dairy herd recorded through Promar’s Farm Business Accounts (FBA) service, the spend on fertiliser last year was £17,600 but next year this will be £36,800 at the same usage rates.
“To put this in context, these herds have 240 cows with an average 9000 litres/cow. Assuming no change in milk price they will need to produce 64,000 litres more, 266 litres/cow, just to cover the increase in fertiliser costs.
“The average FBA farmer spent £148 per hectare on fertiliser for cereals and will be facing a fall in gross margin of around 15% due to the higher cost of fertiliser.”
She says farmers need to plan now to make better use of fertiliser and other sources of plant nutrients to offset some of the price increase. She advises getting soil analysed and recalculating fertiliser requirements based on soil indices. She suggests many farms could take a P and K holiday on some fields, particularly those which have previously had high applications of slurry or muck.
“Precision will be key. Get fertiliser spreaders calibrated to make sure this expensive input is spread where it needs to be. Assess fields carefully, as many will have less productive areas where fertiliser could be reduced. Perhaps reduce applications on older, less productive swards.
“The relative value of slurries and manures will increase this year. Covering field heaps and slurry lagoons will reduce losses, leaving more nutrients to be spread. Allowing a crust to develop will also reduce wastage.
“When spreading slurry in the spring, use a trailing shoe or shallow injection to increase nutrient retention and plough any manures in as quickly as possible.
“Consider planting green crops into maize and cereal stubbles. They will reduce nutrient leaching and increase retention with the nutrients available when the crop is ploughed in. This approach will also help improve soil structure.
“There is no doubt that fertiliser prices will be significantly higher moving forward, reducing margins and profits. The extent to which this happens is a combination of global price movements and actions taken by individual farm businesses to moderate the impact.”