The price of superphosphate fertiliser could exceed $400 a tonne in coming months as manufacturing companies warn farmers to brace themselves for another round of price increases.
The two main fertiliser co-operatives, Ballance Agri Nutrients and Ravensdown Fertiliser, confirmed yesterday they were reviewing prices, but declined to say how much they would increase.
Rumours are rife superphosphate, the most commonly used fertiliser, could reach uncharted territory, increasing from about $270 a tonne to more than $400. In February 2007 it was selling for $193 a tonne.
Ballance chief executive Larry Bilodeau said prices were unlikely to move in the next two to three weeks, but when they did he said the increase would be "significant''.
His Ravensdown counterpart, Rodney Green, agreed, saying the co-operative announced in December it was holding prices until June 1 to assist traditional autumn fertiliser applicators.
He could not say by how much prices would rise, but said the increase would be across all products.
The price of superphosphate sold in Australia by companies that were not co-operatives, had hit $480 a tonne and DAP $1500 a tonne.
This is further bad news for farmers, fertiliser being the largest farm cost after mortgages. The sector was already grappling with large price rises, with on-farm inflation exceeding 4% for three of the past four years.
Higher fertiliser prices were being driven by demand from developing countries shoring up domestic food production in the face of soaring international prices.
"It is being driven by developing countries,'' Mr Green said.
In less than a year, the price of rice has increased from $US300 to $US795 prompting poorer countries to increase production for which they need fertiliser.
China, a major exporter of urea and superphosphate, initially imposed a 35% export tariff on fertiliser to discourage exports, then banned railway wagons from carting it, but has since placed a 135% export tariff.
Mr Bilodeau said the international scene was changing almost daily.
"Every time we discuss fertiliser pricing we have a new set of numbers and a new set of highs,'' he said.
"All raw materials we need to make the products we sell are going up on top of very sharp increases we have seen in the last 12 months.''
Three years ago, sulphur was selling for $US40 a tonne but was now making $US500 a tonne.
In the same period, phosphate rock increased from $US50 a tonne to $US300 a tonne, while in two years potash has increased from $US140 to $US400. Added to that were higher shipping costs on the back of soaring oil prices.
"It's just mind boggling.''
Ballance recommended farmers test their soil and if necessary delay applying fertiliser. With the extensive dry season, many sheep, beef and dairy farmers were using nitrogen fertiliser to build a bank of grass to compensate for lower winter supplement yields.
