Cutting carbon emissions will lead to greater focus on nitrogen use
Volatility will continue to be a feature of the fertiliser market, but increasingly the industry will also have to address its green credentials, according to GrowHow UK's marketing manager Ken Bowler
As the UK fertiliser market comes to the end of another season, all the signs are in place that volatility will continue to be a major feature as market forces worldwide impact on demand and raw material prices.
Past seasons have seen volatility driven mainly by consumption of fertiliser products as well as some effects from energy costs. However, exchange rates will also have a strong influence on fertiliser pricing through the 2010-11 marketing season which will begin during June.
At the end of each season, there is usually a period when prices slacken a little as stocks increase and demand falls away. However, with food security still concerning many nations there is no reason to believe that global fertiliser demand will reduce. On the contrary many emerging economies, such as India and China continue to enjoy significant economic growth. With such growth comes demand for improved diet, which in turn means demand for more crop nutrients.
GrowHow operates as a business dedicated to manufacturing and supplying farmers across Great Britain. We see no reason to believe that there will be any significant change in home consumption. Although, we will be urging farmers to look again at their fertiliser needs; not just nitrogen but also sulphur as our research is pointing to sulphur being a limiting factor in optimising yield potential on many arable farms, particularly those growing cereals. However, alongside the vagaries of supply and demand across the world, there is also the increasing volatility of currency fluctuations. UK farming has benefited from the comparative weakness of sterling against the euro.
However, as the eurozone countries come to the aid of the Greek economy there must be doubts as to the future exchange rates between the two currencies. Similarly, there has been volatility in recent times with the dollar. This again can affect prices on the world markets which will impact the UK.
Market uncertainty
The new season arable launch will take all these factors into account and individual businesses will have to consider them with policies on buying that include an element of risk management for volatile markets.
Looking further into the future, another challenge to the fertiliser industry is the need to deliver not just product, but also environmental benefit. Manufacture has a large environmental footprint; although fertiliser is still vital to an overall efficient agricultural system.
As fertiliser manufacturers we are looking to high levels of investment to meet our environmental goals. The scale of the challenge is illustrated by the upgrading of our facilities at Billingham at the start of 2010. We invested a total of £13million in our Nitram plant. Of this, just £3m was dedicated to improving our production efficiency. Three times that was spent on delivering environmental benefits in our discharges to both air and water.
And this is just the start. Compliance with new EU environmental regulations will demand further major investment at our plants in Ince and Billingham.
The challenge for us and for our customers is how to communicate these benefits to a wider audience. We are not just investing to meet increasingly stringent legislation, our improvements in manufacture will also bring benefits to our customers. There is little doubt that farmers will come under increasing pressure to reduce their carbon footprint. Already environmental pressure groups are calling for such action and the government's climate change legislation will drive farming to be more accountable for its emissions.
In the coming years it is likely that farmers will need a better understanding not just of fertiliser use on their land but also the type of fertiliser used. We have no intention of
turning the blue Nitram bag green, but the product inside will become ever greener.
Reproduced by kind permission of Farm Business Agronomist
