2014-04-28   facebook twitter rss

AtlasFram Launches Unique Ammonium Nitrate Purchasing Pool

Members of AtlasFram Group, the UK’s foremost farmers’ cooperative, are now able to benefit from highly competitive prices on a range of nitrogen fertilisers following the launch of a unique purchasing pool for Ammonium Nitrate, Nitrogen and Nitrogen + Sulphur products.

The initiative also reduces members’ exposure to volatile fertiliser markets, provides set delivery periods and benefits cash flow. The first of its kind, the AtlasFram Ammonium Nitrate Pool follows the successful introduction last year of a ground-breaking Urea Pool, which enables the Group’s 1250 farmer Members - who farm more than 350,000 hectares throughout the UK - to manage price volatility and reduces their financial risk when purchasing this popular product. Last year, in a difficult market environment where prices fluctuated widely, it delivered excellent results for participating members, who were able to purchase high-quality urea for £275 per tonne, with the added bonus of set delivery periods.

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“Historically, farmers who have been in a position to order early were able to benefit from the best prices,” explains Andrew Merton, AtlasFram Group’s Crop Inputs Manager. “Since the start of the global financial crisis in 2008 the dynamics of the fertiliser market have changed considerably and this has not necessarily been the case every year, so farmers may have been better off if they had ordered later. However, judging the best time to buy is exceptionally difficult for individual farm businesses as they do not have access to the necessary market intelligence or specialist knowledge. Fertiliser prices can move very rapidly and the lowest price might only be available for a very short time, so you have to monitor the market constantly and act decisively when an acceptable price level is reached.

“The Ammonium Nitrate Pool is unique to AtlasFram and offers a number of benefits. It allows participating members to benefit from the Group’s access to the most up to date market intelligence and fertiliser specialists who provide completely independent advice solely for the benefit of our members.

“With markets for key farm inputs and outputs now exhibiting far greater volatility, timing farm input purchases and crop sales are critical to profitability. AtlasFram already helps Members to mitigate risk in a number of ways, for example by securing known prices for key inputs such as fuel, feed and electricity, together with key outputs such as grain.

AtlasFram’s fixed-cost membership is based on the productive area farmed rather than levies on the value of product purchases, which is a significant advantage to our members because it protects them against input cost inflation and promotes impartial advice.

“Our fertiliser pools build on that strategy. There is no highly developed futures market for fertiliser, so prices cannot be fixed in advance. We therefore purchase fertiliser to fulfil the tonnage committed by members when prices are at levels which we judge to be relatively low, enabling us to achieve a favourable overall cost per tonne.

“In addition to highly-competitive prices and guaranteed delivery, members can also specify when they want to have product delivered and split their payment to ease cash flow, with 50 per cent due in September and the remainder in January. Members also save time and administration because AtlasFram handles fertiliser purchases and issues a single invoice at the end of the pool period based on the average price per tonne.”

Deciding when to make purchases is the responsibility of a Fertiliser Pool Committee, comprising AtlasFram directors who work closely with Andrew Merton and other specialist staff having a wealth of knowledge, their aim being to achieve the best results for Members.

“We advise members to consider a fertiliser pool in the same way that they would a crop marketing pool, namely to use it initially for a percentage of their requirements to assess the benefits and help to mitigate their risks. If they are comfortable with the results they might then wish to allocate a higher percentage to the pool,” Andrew Merton concludes.


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