Talking Policy with Mike Hambly: Relentless pressue

arableColumnistsPolicyArable FarmingTalking policy+-

But the relief was short-lived, my escape from the gloomy weather replaced by having to face the reality of commodity markets for grain under relentless pressure. Budgets were worked and reworked in an attempt to meet the trading challenge and produce a profitable tonne.

With fertiliser accounting for almost 45% of variable costs, and two-thirds of that relating to nitrogen, it seemed an obvious area to interrogate for possible savings.


The pressure on commodity markets has not been limited to agriculture. The impact on the steel market has been devastating for some UK communities and yet we have all welcomed and benefited from the dramatic fall in energy prices which saw pump prices for both diesel and petrol fall below £1ppl.

January saw Brent Crude Oil dip below US$30 per barrel. European natural gas prices, the key energy component in the production of nitrogen fertiliser, broadly tracked the changes in the oil market. For farmers the farmgate price of fertiliser is what matters, have we received the full benefits of falling energy prices along the chain?


For some time the NFU together with other European farming organisations have expressed concern greater transparency in the fertiliser market was needed.


Statistical analysis of UK and international fertiliser prices has highlighted a widening differential between UK AN compared with Black Sea urea, a fact which has not gone unnoticed by Commission departments in Brussels.

An analysis of UK nitrogen prices over time compared with export statistics has revealed some fascinating information.


The graph clearly demonstrates UK AN is exported at prices well below the domestic market. Considering the UK is not self-sufficient in AN this is surprising in itself. But what is most interesting are the spikes in export tonnage, often at a time when the export price is falling but while the domestic price remains stable.


There are some difficult questions which need to be addressed by the UK AN industry which appear to freely use exports as a method of market manipulation to maintain high domestic prices.


Those who resisted the charm and persistence of merchants and manufacturers to place early nitrogen orders at Cereals last year and held off until the New Year have seen a welcome reduction in price. But has the full benefit been realised?


Continued lobbying by the NFU and other like-minded organisations across Europe is needed to deliver improved market transparency together with a much needed review and change to the import tariffs on nitrogen and phosphate together with the removal of anti-dumping legislation; all factors which increase the on-farm price of fertiliser and put us at a competitive disadvantage when having to sell grain at world prices.

For those who wish to follow trends in the fertiliser market in more detail, NFU has encouraged AHDB to produce its Fertiliser Market Outlook and AMIS to introduce fertiliser to its market monitor, both set to become valuable sources of information for farmers.

Arable Farming
Posted by Arable Farming
PopularCommentsRSS Feed
Twitter Facebook
Rating (0 vote/s)
Post a Comment
To see comments and join in the conversation please log in.

Recent Posts

Recent Posts

Opinion - There's a great future on the horizon once the Brexit shock has died down
"Taking your comments in order, don't hold your "...
Opinion - Glyphosate debacle shows how well-fed bureaucrats risk food security
"Good article though its not actually the B"...
FG Insight and FGInsight.com are trademarks of Briefing Media Ltd.
Farmers Guardian and FarmersGuardian.com are trademarks of Farmers Guardian Ltd, a subsidiary of Briefing Media Ltd.
All material published on FGInsight.com and FarmersGuardian.com is copyrighted © 2016 by Briefing Media Limited. All rights reserved.
RSS news feeds