Irish farmers don’t benefit from urea price drop
Between October 2012 and October 2013 Urea prices in the UK dropped by 31%, while world spot market prices dropped by 28%, but Irish urea prices as published by the CSO stayed the same.
The 31% drop in UK prices equates to €137/t but, despite 40% of Irish urea coming through the UK, the price drop was not passed onto Irish farmers.
Commenting on these trends a fertiliser industry spokesman said that comparisons between the UK and Irish market should be carried out over a five year period, at least.
“But on a day-to-day basis, issues such as the transport costs between Britain and Ireland and the fluctuation in exchange rates must be factored in.
“There are also significant structural changes between the two regions. In the UK many farmers will forward buy fertiliser at this time of the year, which will then be stored for use the following Spring. Invariably, this product will be paid for fully at time of delivery. So there are no credit issues factored in to the price that is actually paid.
“Here in Ireland farmers order fertiliser in the spring and pay for it at the back end. A much fairer comparison would be that of the market dynamics in the Republic of Ireland and Northern Ireland, which is part of the UK. The fertiliser regimes operating within both jurisdictions are very similar and I think the figures will show that the actual fertiliser prices paid North and South are, actually, on a par, when all the relevant factors are taken into account.”
Average UK merchant prices were €76/t cheaper in 2013, compared to the published Irish urea retail price (CSO). Comparing calculated port-side bulk delivery of Black Sea Urea into Ireland with Irish retail prices, an average monthly price difference of €141 per tonne is calculated for 2013.
By 2020 the Irish dairy sector is expected to account for 63% of Nitrogen fertiliser consumption. Fertiliser utilisation and price has a strong impact on the bottom line for grass-based dairy and beef farmers.
Calcium Ammonium Nitrate (CAN) is the other key nitrogen based fertiliser used by Irish livestock farmers. Irish CAN prices have differed by 5% over the past two years, even though two key ingredients in CAN production, namely urea and ammonium nitrate, fluctuated by 30% and 22% respectively during the same timeframe.
Urea can be susceptible to what is known as volatilisation in warmer and drier weather. Volatilisation occurs when urea fertiliser is converted to ammonia gas. Volatilisation typically takes place within the first 48 hours of application. In extreme cases losses can be as high as 25%. Consequently, the use of more stable ‘nitrate’ fertilisers is common.
For this reason, Calcium Ammonium Nitrate (CAN) fertiliser usage is prevalent here in Ireland. The figures below trend Irish CAN and Urea prices not on the basis of price per tonne, but rather on a price per kilogram of nitrogen. The current price per kilogram of nitrogen in CAN is almost 40% higher when compared with the price per kilogram of Nitrogen in Urea.
Attention is now shifting to ‘nitrate’ alternatives. Earlier this year, Advanced Fertilisers in Waterford launched a product called ‘KAN’ from Koch Fertilisers on the Irish market. This is a Urea product with an added stabilisation ingredient call ‘Agrotain’ to help reduce nitrogen losses.