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Irish farmers spend nearly half of their Basic Farm Payment on fertilisers, every year – about €540m. It’s the biggest input spend on tillage farms and for many drystock farmers, too. It’s only just topped by concentrate feed costs on dairy farms.
Volumes are likely to increase in 2019 as grassland farmers seek to rebuild fodder stocks after the shortage of 2018 – a pattern that has been seen before. With prices static or slightly higher this spring, total spend could well increase in 2019.
A problem for farmers is that fertiliser prices rise and fall without any regard to long-term price trends for milk, cattle, sheep and crops. Irish fertiliser prices were on a rising trend in the years after 2000 and peaked in 2015. They fell in 2016 and 2017 but have since begun to rise again – see Figure 1.
In years when fertiliser prices rise, dairy and tillage farmers generally dig deep and spent more – they don’t have much choice. It happened when prices spiked in 2008 and 2009 as well as in 2015. Demand is more price elastic on drystock farms. Sales staff at co-ops and agri merchants know the pattern. The less intensive farmer will spend the same amount of money on fertiliser – but get less of it.
In volume terms, the Irish market totals around 1.5m tonnes of all fertiliser products per year. Almost half are nitrogen fertilisers, the balance mostly phosphate and potash.
Use of all nitrogen fertilisers therefore totals about 700,000t/year. This breaks down as:
Besides price, a number of other factors drive farmer demand for fertilisers up or down. Strong farmgate prices push demand up. Rising cattle numbers will tend to push up volumes. Analysis by Teagasc found that the Nitrates Directive and EU agri-environmental schemes such as REPS, AEOS and GLAS have tended to reduce use.
Imported
No base mineral fertiliser is manufactured in Ireland today. Irish fertiliser companies import fertiliser straights, blending them into NPK compounds as required.
Farmers would be familiar with most of the companies involved. The biggest player is Gouldings, selling an estimated 450,000t. Next is Grassland Ireland on approximately 320,000t. Target Fertilisers handles up to 280,000t.
Grassland Kilkenny sells about 225,000t. Wexford-based Nitrofert sells around 125,000t. International fertiliser manufacturer Yara sells around 60,000t directly to farmers.
Fertilisers are imported year-round in bulk ship loads. The smallest load could be 2,500t and the largest in excess of 15,000t. Fertiliser comes into different ports including Drogheda, Dublin, Belview, New Ross, Cork, Foynes, Derry and Belfast.
These companies generally sell through co-ops and agri-merchants. Some larger buying groups purchase up to 4,000t of fertiliser per year – more than a small co-op or agri-merchant. Total purchasing by all buying groups could have approached 50,000t in some years. Group buying has declined in the past few years.
These companies buy from a wide range of manufacturers but most of it comes from EU-based manufacturers such as OCI, Borealis and Eurochem.
Most of the CAN used here comes from EU manufacturers and is made in the EU. Some CAN is bought from Russian manufacturers. Urea is bought from EU manufacturers, and from Russia, Turkey, Egypt and further afield.
However, much of the nitrogen fertiliser used across the EU and elsewhere is in the form of ammonium nitrate (AN 34%) and it can be cheaper than CAN per unit of nitrogen. AN cannot be sold in Ireland because it can be used to make explosives. EU farmers use some 8m tonnes of AN each year, with about 96% of it manufactured in the EU.
Irish farmers use largely the same phosphate and potash fertlilisers as farmers elsewhere in the EU and across the world. Some phosphate fertiliser is brought from North African manufacturers.
Competitors
It can be difficult to track prices of different nitrogen fertilisers in different EU member states. The data available indicates that the different nitrogen fertilisers tend to follow each other up and down – they are in competition.
It indicates that Irish prices for CAN and urea broadly follow the up and down movement of EU prices for AN and urea, from year to year. Prices for P and K fertilisers here track prices elsewhere in the EU.
Most N, P and K fertilisers are subject to an EU import tariff of 6.5%. This adds €20/t to farmers’ prices for P and K fertilisers, for example. But in addition, specific nitrogen fertilisers are subject to anti-dumping duties which can be two and three times higher per tonne. 
EU farm organisations, led by the IFA, claim that because of anti-dumping duties, EU prices for all nitrogen fertilisers are pegged above global fertiliser prices. EU farmers would benefit by almost €1bn/year if the EU removed duties, they argue.
A campaign to have them removed is ongoing. Anti-dumping duties on Russian ammonium nitrate were reduced by one-third in 2018, from €47/t to €32/t. The remaining two-thirds comes up for review next year.
However, the EU is subject to lobbying by manufacturers. In March, it announced provisional anti-dumping duties on UAN liquid nitrogen and it could make them permanent. While little liquid UAN is used in Ireland, it is widely used in France and other EU countries. A price increase for UAN will tend to push up other N prices, affecting Irish farmers.
European Commissioner for Agriculture Phil Hogan has become closely involved – EU farmers are his responsibility. He has warned his fellow Commissioners that there is evidence of anti-competitive practices in the EU fertiliser sector.
Last week, Joe Healy wrote to the European Commissioner for Trade Cecilia MalmstrÖm calling on her to terminate the remaining anti-dumping duty on Russian AN and the proposed duty on UANs.
Hogan, MalmstrÖm and their colleagues will shortly finish their five-year terms and be replaced later this year by a new team. Whichever politicians take up the agriculture and trade portfolios will have a large influence on import duties on nitrogen fertilisers, and price trends, in the year ahead.
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