The enormous increase in profits announced by one global fertiliser manufacturer will infuriate hard pressed Scottish farmers, struggling to cope with three fold increases in their fertiliser bills year on year.
The 200 percent increase in profitability announced by Yara this week is in stark contrast to the situation of Scottish growers who are struggling to find and pay for their fertiliser requirements for the coming seasons.
NFU Scotland President, Jim McLaren said:
“The genie is well and truly out of the bottle as far as the reasons for the increases in fertiliser costs at farm level are concerned. Farmers had been led to believe that the main reasons for the huge increase in prices were twofold – an increase in the price of the gas needed to make the fertiliser and a surge in the value of the key fertiliser ingredients phosphate and potash.
“However Yara has acknowledged that the huge increase in its profits was largely due to world demand for their products and those profits were only partly effected by increased costs associated with the manufacture. The reality is that the fertiliser manufacturers are profiteering from a dramatic imbalance in the global fertiliser supply and demand situation. This is evident from the near 200 percent increase in profitability announced by Yara against a backdrop of 19 percent increase in sales by volume.
“Yara's dominant position in UK, EU and world fertiliser markets, compounded by its recent acquisition of fellow manufacturer Kemira, means that this set of results may start alarm bells ringing with competition authorities. Despite the fact that further global production of fertiliser will be coming on stream in 2010, this does nothing for the situation facing farmers for the 2008 and 2009 seasons.
“It used to be the case that farmers would order their fertiliser requirements and take delivery over the course of several months. Manufacturers encouraged this practice and offered favourable payment terms over several more months as it allowed the expensive fertiliser production process, particularly of nitrogen, to be carried out in the summer when gas prices were lower.
“The tables have turned completely, and the manufacturers are now in the luxurious position of saying “take it or leave it”, on their terms, and at hugely inflated prices.”
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