‘Hogan is making the wrong argument where fertiliser prices are concerned’

EU Agriculture Commissioner Phil Hogan is mistaken in directly linking oil prices to fertilizer manufacturing costs, according to Fertilisers Europe.

The Brussels-based organisation was responding to last week’s confirmation by the Commissioner that he has written to the EU Competition Commission, highlighting his concerns to the effect that fertiliser prices have not fallen in line with the recent falls recorded on international oil markets.

“Gas prices determine the cost of producing Nitrogen fertilisers,” a Fertilizers Europe spokesman said.

“And these are in no way linked to the oil market.  What’s more they are independently regulated and are totally transparent. These points have been made to DG Agri over the past number of weeks and the members of Commissioner Hogan’s team are very aware of this reality.”

Fertilizers Europe has said that gas prices have fallen by approximately 30% over the past six months but cannot predict if this represents the start of a long-term downward trend in energy prices.

The spokesman added that fertiliser is like any other commodity: prices are dictated by supply and demand factors.

“On the supply side we have recently seen the recent closure of two manufacturing plants in Ukraine. The continuing unrest in the Middle East is also impacting on supplies from that part of the world,” he said.

“The performance of agriculture in the US will be the key demand factor impacting on international fertiliser prices over the coming months. If, as expected, agri output expands, this will have an upward impact on the fertiliser market. But it will take at least a month to find out how the intentions of farmers in the US will play out in terms of their fertilizer requirements in 2015.

“At the moment, the fall in gas prices is having a softening effect on the international fertiliser market. But the next few weeks will be critical in determining the strength, or otherwise, of fertilizer prices in the medium to long term.”