Fertiliser prices hamper grains profitability

Sharp increases in local fertiliser prices are undermining the profitability of the grain industry.
Issue date: 22 February 2008

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Sharp increases in local fertiliser prices are undermining the profitability of the grain industry. Farmers at Grain SA’s regional meeting in Kroonstad said their economic survival was at stake should the increases continue and grain prices remain at current levels.

Fertiliser contributes up to 30% to direct allocatable input costs. G rain SA agricultural economist Corné Louw said fertiliser prices on average increased in the period January 2007 to January 2008. MAP increased by 61,8%, pushing the price up from R3 968/t to R6 419, urea increased by 35,6%/t to R4 706, KAN increased by 34,5% to R3 356, and calium chloride went up to R4 151p/t, a 32,6% increase.

Further unexpected increases in February this year are a cause for concern. MAP went up 22% to R7 828p/t. Urea increased by 1,8% to R4 790p/t. KAN went up 1,8% to R3 417p/t. Calium chloride jumped from 31,6% to R5 465p/t. Fuel prices, which contribute 15% to direct allocatable input costs, are another cause for concern.

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The Central Energy Fund earlier this month indicated that the fuel price could increase by as much as 35c/ℓ on 5 March. Wholesale prices for diesel escalated in February to the current R7,33/ℓ. Farmers at the meeting were advised to actively negotiate for the best prices possible – Annelie Coleman.

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Annelie Coleman represents Farmer’s Weekly in the Free State, North West and Northern Cape. Agriculture is in her blood. She grew up on a maize farm in the Wesselsbron district where her brother is still continuing with the family business. Annelie is passionate about the area she works in and calls it ‘God’s own country’. She’s particularly interested in beef cattle farming, especially with the indigenous African breeds. She’s an avid reader and owns a comprehensive collection of Africana covering hunting in colonial Africa, missionary history of same period, as well as Rhodesian literature.