Fertiliser prices rocket in 2000

By Roger Chesher

THE rate at which fertiliser prices rose in 2000 could well be a record.

Nitrogen jumped some 52% from 85/tonne to 130/t over the year. The price itself is not a record though.

Back in the mid eighties nitrogen was 140/t, and 135/t in 1996. Apply the RPI to the 1985 price and ammonium nitrate today would be 248/t.

The UK fertiliser industry made losses in six of the 10 years of the decade and the factory owners finally said “enough”.

With shareholders expecting annual dividends, the large international chemical giants were forced to reduce reliance on nitrates, which is a highly cyclical business, and massive capacity cuts were made in Europe.

Fourteen plants, totalling 4.4m tonnes of production, had to go across Europe, including 660,000 tonnes of ammonium nitrate at Immingham in Britain.

This plant, owned by Hydro, traces its origins back to the name once synonymous with fertiliser, Fisons, and its closure was seen as a sad day throughout the industry.

With the supply and demand balance then more in equilibrium, the UK fertiliser market began to reflect more closely the European and Global marketplace.

Hard as it is to accept, price rises here were the lowest in Europe last year, with the exception of Ireland.

Gas prices doubled (UK from 10.1 to 20p/therm) and world ammonia and urea prices followed.

This resulted in a rise in import prices as well as domestic, as imports took on a new importance.

More was needed to fill the gap left by plant closures, and 497,000 tonnes were imported, against 190,000 in 1999.

Farmers bodies then took a stand against import duties, claiming they held the price of fertiliser up – something of a red herring, as duties only applied to three of the 10 non-EC importing countries last year.

In practical terms, the fertiliser market took on a structure which it had not held for over a decade – cash-only, rebates of 2 or more per month for early delivery, and a published price which stuck throughout the season.

It was a sad irony that the fertiliser industry managed to increase prices to a point where survival via a modest profit could result, at a time when farm incomes could least afford to support them.