The gloomy outlook for Scotland’s hard pressed producers is that fertiliser prices may remain at unprecedented levels until new manufacturing capacity comes on stream in 2010.

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In the past week, NFU Scotland has met with the Agricultural Industries Confederation (AIC) – an umbrella organisation for the agricultural supply trade – and GrowHow, the only fertiliser company manufacturing in the UK. At both meetings, NFU Scotland was told that the price misery on fertiliser is likely to continue even if the costs of raw materials such as oil and gas started to fall.

NFU Scotland President, Jim McLaren said:

“These meetings have generated little comfort for us and our members who have seen the price of fertiliser treble in the past 12 months. Expenditure on fertiliser, along with fuel costs and animal feed prices, are part of a triple whammy that is driving the costs associated with producing food in this country skyward.

“Fertiliser manufacturers and their representatives have reiterated that they operate in a global market and that it is world demand from developing nations like China, India and South America that is setting the pace. The fertiliser trade maintains that those farming in developed nations, such as the EU and the USA, are paying the same price for their fertiliser regardless of where they farm.

“What is most worrying is the fertiliser industry’s belief that prices will remain high and that this would be unaffected by any down turn in the cost of the oil and gas needed in the manufacturing process for fertiliser. This price spike will continue until new manufacturing capacity comes on stream in 2010. Given the recent three-fold increase in profits announced by one manufacturer, this is deeply alarming.

“In this period of exceptional profitability for those in the fertiliser business, we have asked GrowHow to go back and revisit the finance terms that they, as a company, had made available to farmers in the past. This would send out a positive signal to their customers who are reading about the record profits made by one of GrowHow’s parent companies, Yara, while at the same time extending their overdraft facility to pay their fertiliser bill.”

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