Riddle of urea price now goes to EU DG

THE early signs seem to indicate an increase in fertiliser price this year despite the fact that fuel – one of the big costs in the manufacture of nitrogen – has fallen by over 30% in recent months.

Now the IFA have called on the EU Commission to investigate ‘what’s going on’ in relation to fertiliser prices for the coming year in Ireland with estimates of increases of between 3% and 7%.

IFA Inputs Project Team Leader, James McCarthy, said that ammonia used to produce urea and CAN, was highly energy dependent – so when fuel costs dropped, so also should the cost of the end product.

“The transformation of atmospheric nitrogen into ammonia is energy intensive. International studies have shown that natural gas accounts for 72%-85% of ammonia production costs.

“Average wholesale gas prices for 2014 fell in excess of 30%. Paradoxically wholesale CAN (calcium ammonium nitrate) and urea prices are bucking this trend. Instead of decreasing, wholesale CAN prices are up 4% on 2014 and forecast to go up a further 3%,” said James McCarthy.

Galway IFA Environmental Representative Bertie Roche told the Farming Tribune that the early indications from the merchants was that there would be an increase in fertiliser prices this year.

“It does seem hard to fathom out that fertiliser prices can increase at a time when the cost of making the product has dropped significantly. We are trying to find out what’s going on and the matter is being pursued at EU Commission level,” said Bertie Roche.

He added that some of the merchants had told him that the strength of the US dollar against the euro was a factor in the likelihood of a price increase this year.

“It’s difficult to know what to advise. Some farmers are buying in small amounts of urea but the cuts in energy costs don’t seem to be translating into any reduction in fertiliser prices. The early indications seem to suggest a price increase, possibly up to 7%,” said Bertie Roche.

James McCarthy said it was clear that changes to EU regulations were needed to address market concentration and the unbalanced power held by a small number of multi-national input suppliers

“The Irish Government and agri-food industry must engage with the EU Commission to tackle the major cartels controlling, in particular, the supply and price of fertiliser,” he said.

Mr. McCarthy added that he welcomed the commitment of Commissioner Phil Hogan to raise the fertiliser price disparity issue with his colleague, the Competition Commissioner, Margrethe Vestager.

“It is paramount that any activities by manufacturers which potentially breach competition are investigated by DG Competition,” he said.