Seed rivals merge processing outfits

11 June 1999




Seed rivals merge processing outfits

BETTER value for money and a more efficient service are promised by agri-businesses Cargill and Banks, following the decision to merge their seed processing operations.

The new outfit, trading as Newtech Processing, will handle over 20% of the UKs certified seed, (currently standing at about 300,000t), claims Cargill general manager, Mark Aitchison. Initially this will be from the companies Swinderby and Newbury plants, but will later include a £3m facility to be built in Bedfordshire next year.

Cargills Turvey and Blandford plants will close this summer, with the loss of about 15 jobs, while Banks Sandy seed facility will shut down early next year.

Company bosses insist that the respective sales teams will continue to work in isolation, effectively competing with each other at farm level. Existing exclusivity deals with seed breeders will also be unaffected, as will the companies own brands, ensuring no loss of choice to farmers.

Taking out some of the over-capacity which has blighted the seed trade for so long will also reduce costs for the two merchants. "This will enhance efficiency and enable us to offer better value for money," says Mr Aitchison. "The industry has to address the fact that farmers are finding life very difficult."

Whether this means cheaper seed to growers remains to be seen. Gerry Cook of wholesalers Seed Innovations says on-farm prices are already at rock bottom and further cuts would drive more out of business.

"The trade has been very welcoming of the move by Cargill and Banks," he says. "Anything that cuts over-capacity is good news."n

FERTILISER MARKETUPDATE

June 1999 (£/t delivered*)

Product 20:10:10 20:10:10 20:5:15 AN imported AN domestic

complex** blend

England and Wales

grassland areas 110-115 105-110 90-92 80-84 88-92

England and Wales

arable areas – – 93-96 80-81 –

Scotland 108-112 103-108 88-95 80-81 90-93

*All illustrated prices are based on 20t loads for immediate payment. Smaller loads or those with credit terms will vary considerably.

**Complex fertilisers are those where all nutrients are combined in one granule.

By Bridgewater Associates

Oversupply in the UK fertiliser trade is making it a buyers market.

That will continue to be the case until the fate of Terra Nitrogen – formerly ICI – is known. The business, with production at Billingham and Severnside, remains "up for sale", but so far no clear buyer has emerged and its future is uncertain.

Despite the low prices, sales are slow, apart from the aftercut trade in Scotland, where orders for group business have been reported in the high £80s for KN and NKS products.

Individual farmer purchases are on a more ad hoc basis, at higher prices.

Speculation about the forthcoming nitrogen market has started with merchants talking of prices for domestic 34.5% N below current rates.

This is way below the expectations of the majors, who are hoping the season starts around £90/t. Prices are already rock bottom, they complain.

With the spot nitrogen market still about £88-£92/t delivered, one could anticipate that the majors will open the season around that level. All eyes are on Terra, the markets biggest player, to set terms.

In contrast, prices for PKs should hold firm at about £120/t, but attractive prices for imported 8.24.24 could be a possibility once the market gets underway.


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