NFU President Peter Kendall has promised to throw “considerable resources” into ensuring UK fertiliser prices remain in line with mainland Europe.

Cereals 2008 PICTURE GALLERY and FORUMS.

He was responding to concerns among members over the fertiliser market now that the UK only had a single manufacturer, following last year’s merger of Terra and Kemira into GrowHow, in which Yara also held a 50% stake.

Speaking at Cereals 2008, he accused the fertiliser industry’s “appallingly poor communication” for creating that concern.

“The NFU is challenging the fertiliser industry to get on the front foot when it comes to communications with farmers, and to give a clear indication of why they have reorganised their channels of supply,” he said.

Less business

While 40% of the nitrogen market had been booked by the Cereals event last year, much less business had taken place this year now that Terra’s strategy of booking early tonnage at a lower margin had been halted. At the same time, prices had jumped from £150/t to £330/t in the same period, he added.

Some farmers at the event claimed they had been unable to book fertiliser in the month they wanted, and had to pay higher prices for later deliveries.

“The fertiliser industry needs to communicate how the global fertiliser industry is changing, and what is happening to gas prices. I have had meetings and I think their explanations stack up, but they need to communicate this better.”

Competition

Nevertheless, Mr Kendall believed the new market position warranted a close eye being kept on prices.

“The NFU is committed to energetically monitoring UK fertiliser prices within a European context because our focus is the competitiveness of UK agriculture. If prices get out of kilter with our competitors, then we will make representation to the appropriate parties regarding the market position,” said Mr Kendall.

GrowHow’s Ken Bowler said his company had been communicating on the market since the joint venture was announced, but added that they were taking the criticism on board. “We want to improve communications.”

Forward contracts

He said GrowHow was offering forward contracts up to the new year, in contrast to most European makers, despite a 50% hike in forward gas prices over that period.

“We have had to hedge costs to try to satisfy normal early season demand, but we aren’t saying it will all be at the June price.” He put that at £325/t, rising to £348/t by December. Two pounds of the monthly increase was simply the cost of the money, the remainder accounted for by an early-booking incentive.

He insisted that the UK fertiliser price had to remain in line with Europe, otherwise imports would be sucked in. And he added that although farmers might perceive there was one UK supplier, tough competition laws meant the partners remained competitors and could not communicate over prices or sales practices.