A fall in nitrogen prices was not unexpected, given the economic situation and lower energy and commodity costs. While welcomed by those who have yet to buy, and seen as a hopeful presage of next season, it has led to protests among those who bought earlier at much higher prices.

Some buyers are philosophical, others are angrier in their perception that the UK fertiliser industry – in the form of GrowHow UK – has somehow excessively profited at their expense. If that is the case, this assertion must be levelled at the global industry. The cost of UK nitrogen has largely mirrored world prices throughout the year and been subject to the same market forces as everywhere else. GrowHow marketing manager Ken Bowler insisted that the firm’s prices had occasionally undercut world prices and been cheaper than spot imports.

“The UK, which is a mere 1% of global sales, depends upon imports for 60% of its fertiliser requirements,” he said. “And while we are the one remaining UK manufacturer, we are far from being in a monopolistic situation, competing as we do with opportunistic sellers.

“It is inevitable that prices will fluctuate under modern market conditions. Fertilisers were hit by the commodity boom during 2008, which corresponded with high prices for gas. But we must remember that pricing is a double-edged sword. As prices were rising rapidly in the spring of 2008, GrowHow still manufactured and delivered every tonne that was ordered in 2007 at much lower prices,” he said.

Stuart Allison, sales manager for Frontier, the UK’s largest fertiliser retailer, denied that manufacturers or merchants were profiting at farmers’ expense and said agriculture was part of a world market experiencing a global recession. “It is unfortunate that some farmers must write down the value of their summer fertiliser purchases. But exactly the same situation applies to merchants’ stock. Some blenders with phosphate and nitrogen in store will be badly hit.”

The reality is that the nature of the fertiliser industry has changed dramatically in recent years, while farmers’ perceptions of it remain rooted in the past, something the fertiliser industry has failed to alter. In some quarters the perception of the industry is still based on that of fertiliser production buoyed by multinational chemical, paint and pulp giants. These had steady and predictable input costs with large sales, marketing and PR teams – plus the ability to offer credit, structure price lists, or even proffer “trust” deals, through a wide merchant distribution network.

Today, producers must answer directly to shareholders and survive or fail on fertiliser sales alone, to the point of shutting down if necessary in periods of low profitability. If possible, they aim to maintain continual production of a product which the farmer only needs once or twice a year. The days of fixed forward gas contracts have gone and commodity markets are so volatile that maintaining a price structure to encourage a steady monthly farm delivery programme is extremely difficult.

Many farmers will be sincerely disappointed that prices have dropped since they placed orders. But at least the fact that prices are on the way down must be welcome news.

Roger Chesher is an independent fertiliser industry consultant.

All illustrated prices are based upon 24t loads for cash payment the month following. Prices for smaller loads and 50kg bags will vary considerably.