Farmers would be strongly advised to take a ‘wait and see’ attitude when it comes to buying fertiliser over the coming weeks.
We can take it as read that prices will remain strong over the coming months. But an even bigger worry now appearing on the horizon is that of actual product availability.
Fertiliser importers are indicating that they have enough supply in the system for February distribution. However all bets are off, where March is concerned.
Issue of fertiliser supply?
So why have we reached this point? The issues boil down to the fact that ‘just in time’ supply systems work well until something breaks down.
And, from what I can make out, every aspect of the fertiliser manufacturing and supply chain is under pressure right now.
Manufacturers shut a number of plants before Christmas on the back of natural gas prices rising and farmers not buying. As a consequence, the start of the year has seen all of the big fertiliser operations playing ‘catch up’, from a production point of view.
This process is now underway. But it is being hampered by the fact that Covid-19 has conspired to hit workforce numbers across western Europe and beyond.
The same rationale comes into play from a distribution point of view. Covid-19 has ravaged the world’s shipping and transport sectors.
And, again, this matter continues to play out at a time when farmers in the northern hemisphere are about to enter that time of year when demand for fertiliser will be at a premium.
Commodities still rising
So why should the cost of fertiliser not be the big issue that is keeping farmers awake at night?
The reality is that most farm commodity prices – including milk, beef, lamb and grain – are more than holding their own at the present time.
Milk prices are set to remain reasonably buoyant throughout the early months of 2022, at least. And the same can be said for beef and lamb.
I sat in on the first Teagasc tillage conference of 2022, at which a number of speakers projected the ratio between the grain price that may well be available later this year and 2022 fertiliser prices remaining reasonably healthy.
So it is by no means bad news for farmers as they look forward to the year ahead. There is also the probability that fertiliser prices will weaken as the year progresses.
So taking a step by step attitude towards fertiliser purchasing over the coming weeks makes perfect sense.