GrowHow Conference 2009
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Thursday 14th May |
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East of England Showground, Peterborough |
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Words reproduced with kind permission of Mike Smith, Managing Editor, Fertilizer Focus, FMB Consultancy Ltd.
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GrowHow UK Limited held its Annual Conference for 2009 at the East of England Showground, Peterborough, UK, on 14 May. Approaching 150 people attended the "Helping British Farmers Grow" event; in addition to GrowHow staff, the invited delegates included a wide spectrum of representatives from all along the agricultural supply chain, including farmers, analysts, consultants, agronomist and press. The meeting was addressed by a total of eight speakers, four from GrowHow and four from outside the company. Presiding was Mike Buchan, recently promoted to the position of Commercial Director of GrowHow UK Ltd. After an opening address from Mr. Buchan, the first speaker was Sean Rickard, Senior Lecturer in Business Economics at Cranfield University, who discussed "Fertiliser, Food & Economics - The Return of Industrial Farming". Mr. Rickard noted that farming throughout the world faced a major challenge in the years ahead, that of feeding a growing and increasingly affluent population. Food production would need to be doubled by 2050, he suggested. To the 1980s, the UK farmer had been encouraged to maximise food production and efficiency; then policies in the EU changed to address the problem of overproduction. However, food shortages and rising food prices in the past two years or so will necessitate a return to the pre-1980s policy framework, he suggested. The environment was important, but a balance had to be struck between feeding the world's growing population and minimizing the environmental impact of agriculture. Organic farming methods could not provide a solution to these problems; what was needed was a changed mindset in favour of industrialised agriculture. A scientific approach, including research and development into a variety of aspects of agricultural production (including GM crops) was required. Certainly, fertilisers would have a key role to play in the future, given that the UN estimates that currently 40% of the world population is fed thanks to the use of mineral fertilisers. |
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The second speaker, Bernard Brentnall, is a regular speaker at FMB Conferences. In this instance, he discussed "Global Fertiliser Dynamics". Bernard began by arguing that a 30 year mega-cycle within the fertilizer sector had reached its end recently. This cycle had seen many governments in the developing world striving to reach self-sufficiency in food production; many had invested heavily in the fertiliser production industry with this aim in mind but this had ultimately resulted in vast overinvestment in the sector and chronic product oversupply. Currently, we are experiencing normal post-boom symptoms - such as stocks of high cost material, inability to purchase until these stocks have been absorbed by the system, doubts about the viability of some producers/suppliers, hand-to-mouth trading and purchasing - and some forces that are usual - such as no build-up of grain and food stocks, the impact of biofuels, a creaking financial and credit system and rapid action by fertiliser producers to curtail output. In the future, he forecast that there would be no chronic oversupply of nutrients, unlike in the past, as a new cost structure was in place; capital costs have risen of late by 50% to 100% and energy costs have reached a new, higher level, which, in the current environment, makes the financing of new projects more risky and thus less attractive. As a consequence, the amount of new capacity likely to be brought on stream will be very limited. The exception, in the nitrogen sector, is China, where the aim of the government is to ensure sufficient capacity is available to produce food to feed its own population, exporting fertiliser when local production exceeds local demand. In phosphates, major additions to capacity post Ma'aden in Saudi Arabia are likely to be limited to China and Morocco, the two countries where indigenous phosphate rock reserves are the largest in the world. China is expanding through many projects, as most of its individual phosphate rock deposits are small and widespread but the country needs the end-product to feed its population, while OCP of Morocco intends to extend its grip on the international phosphates trade through doubling capacity at its Khouribga mine from 20 million tpa to 40 million tpa by 2012 and to double its processing capacity by 2020. Investment in the foreseeable future in the potash sector is likely to be limited largely to expansions and new mines in Canada, Russia and Belarus, he suggested, as the end of the bull-run has reduced the chances of financing the many potash projects that have been put forward in the recent past.
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Ken Bowler, Marketing Manager at GrowHow UK, discussed the "GB Fertiliser Perspective". The fertiliser market of Great Britain accounts for around 1% of the global market and imports around 60% of its requirements. It is an AN-based nitrogen market, whereas CAN dominates the market on the Continent of Europe. Unlike elsewhere in Europe, the market has little intermediate storage and infrastructure, meaning that large amounts of product need to be moved to farm early in the season if farmer demand for the whole season is to be met. GrowHow is now the only fertiliser producer in the UK; its aim is to supply the highly-regulated domestic market with product, agronomic advice and a range of related services. He suggested that this year (2008/09) GB fertiliser demand would be down considerably on the level of the previous year, at around 2 million tonnes of nitrogen fertilisers and 1 million tonnes of compound fertiliser; this compared to around 2.7 million tonnes of nitrogen fertilisers and 3 million tonnes of compounds in 1996/97 and, in 2007/08, to 2.2 million tonnes for Nitrogen and 1.6 million tonnes for compounds. In terms of imports over the period May 2008 to February 2009, AN imports were at a similar level (around 491,000 tonnes but urea imports had increased from 439,000 tonnes to 598,000 tonnes; given the additional volatilization losses resulting from using urea in UK conditions, this trend was not good for the environment or for the GB farmer, he argued. Ken suggested that, after destocking by farmers, 2009/2010 should see a recover in demand, by around 10%. In closing, he suggested that a "just-in-time market" was not practical in GB; in the past, farmers had benefited from lower prices early in the season to encourage early buying activity e.g. in June and July. Now, GrowHow is working on a pricing policy that will further smooth out buying peaks, spreading purchasing activity more over the September to March period.
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Post-lunch, Peter Kendall, President of the National Farmers Union of England and Wales (NFU), discussed "Challenges to British Farmers". Farming throughout the world had a major challenge, he suggested, namely producing enough food to feed the world's population on a declining stock of good quality farmland. To help the GB farmer to contribute to this goal, a favourable government policy framework was required. Farmers should be encouraged to produce more food in a sustainable environmentally-sensitive manner, without being hindered by unnecessary, counter-productive environmental policies e.g. concerning emissions from farms and climate change. The GB farmer has the ability to be a world beater, he suggested - what the GB farmer needed was support from government and from those in the whole of the agricultural supply chain to achieve this status. More spending by the public and private sector was required on research and development in agriculture; public spending in this area had fallen by 45% between 1986 and 1998 he noted. With the rate of growth in crop yields falling and the cost of inputs rising, research and development was essential. He also called for all stakeholders to work together to enable farmers to better manage risk and market volatility; this would help farmers' incomes and their ability to invest for the future of their farms. Turning to the fertiliser sector, he said that having a local fertiliser producer was beneficial to the GB farmer but noted that bad feeling had arisen due to the coincidence of the rise in fertiliser prices and the creation of GrowHow. He called for a better dialogue between local suppliers and farmers and suggested that amending the GrowHow marketing policy with this in mind might help.
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| Richard Huxtable, Sales Manager at GrowHow, outlined "Challenges for the Industry". According to Richard, these include 1. Financial challenges - obtaining finance in the current economic climate for essential CAPEX projects is extremely difficult and may result in project delays or cancellations, to the long-term detriment of industry; 2. Risk management - increased volatility and additional risk go hand-in-hand, as the past year had shown; 3. Agronomy - it is essential for the farmer to maximise the value of his crop at harvest through the use of all inputs, including fertiliser, pesticides and insecticides. Given the drop in fertiliser use, GrowHow expected Nitrogen testing to increase this year but it has fallen; the company's N-Min testing service can help farmer to maximise returns from their fertiliser inputs; 4. Environment - the impact of different N sources vary and advice is available to ensure that the correct N source is used from an environmental viewpoint; to reduce N losses from fertiliser, AN is preferable to urea under the cultivation conditions in the GB; 5. Manufacturing and Efficiency - GrowHow is involved in a global manufacturing industry but is aiming to improve its performance through driving innovation forward, encouraging the adoption throughout the supply chain of best management practices and eliminating waste; 6. Agendas - everybody has their own agenda some can impede progress and communication; and 7. Communication - better communication throughout the supply chain is essential if knowledge about essential issues is to be passed on to other people.
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| In her talk "Industry Issues", Deborah Pritchard Jones, Business Projects and Public Affairs Manager at GrowHow, outlined her activities over the past year. These included high-level meeting with Ministers on a variety of subjects, including climate change and carbon emissions. Energy was also high up on her agenda; as a major energy user, GrowHow is seeking affordable, stable, long-term gas prices but, unfortunately, the company has to buy much of its gas on the spot market and so is subject to the whims of a very volatile market. The UK has very little gas storage capacity in comparison to major Continental countries and also has no long-term LNG supply contracts in place; action on this front could reduce volatility, Deborah suggested. Longer-term, new (non-gas) sources of feedstock for fertiliser production might be available, she suggested. She called for the use of assets in a more sustainable manner and suggested that new opportunities could be created within the low carbon economy, such as the use of ammonia in emissions reduction techniques. Science and technology holds the key to many industry issues, she concluded.
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| David Beck, Marketing Analyst at GrowHow, then conducted an extremely enjoyable interactive research session. Delegates were asked to answer a series of questions on a wide range of agriculture-related topics; some of the answers were compared with those of a panel of the public and farmers.
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Concluding the meeting was David Caffall, Chief Executive of the Agriculture Industries Confederation (AIC), who discussed "Part of the Solution - Our Industries Role in Climate Change". He outlined recent discussions and policy issue options relating to the debate on climate change and agriculture in GB and called for the entire supply chain to pull together to ensure the best possible outcome for agriculture. He called upon the agricultural sector to formulate short, sharp winning messages that are evidence based and effectively counter the arguments of the environmental pressure groups by emphasising that modern efficient agriculture is essential to the provision of adequate food sources. He pledged that AIC would continue to brief the Climate Change Committee to ensure that the point of view of the sector is heard at the highest possible relevant level.
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