High fertiliser prices: How are farmers worldwide coping with it? | Part 1

Fertiliser prices have more than doubled, Farm Manager and part owner Michael Nichols of Redbank Farm in Tasmania, Australia says. “It was something I did not expect. And you can only buy so much stock. You can only buy enough for one season.”

You can’t buy two- or three-years’ worth of fertiliser, because there is not enough money in the kitty to do that

“We heard rumours that prices might go up last season, mainly because of freight costs. Shipping prices had gone up. So, we bought a portion of our usage for the next season. It was a sort of trading. But you can’t buy two- or three-years’ worth of fertiliser, because there is not enough money in the kitty to do that. Even if it is cheaper at the time.”

High fertiliser prices raised costs with 30%

The high prices of fertiliser have raised the overall costs of Redbank Farm with 30%. “It makes a big difference on our gross margin”, Mr Nichols emphasises. The situation prompted Redbank Farm to change the way it uses fertiliser. “We are a lot more precise when applying fertiliser now.”

“We used to happily spread nitrogen, urea, when there was a change of rain washing it in. Now we need to be 100 percent sure there will be rain. Or we are just not going to put it out. We cannot afford to lose some of it through volatisation, and let it escape into the atmosphere. It’s too expensive to throw around.”

More accurate with spreading

Mr Nichols is also keeping a close eye on his precision applications on the farm. “We make sure the spreader is calibrated correctly. You don’t want to be over-applying or under-applying. You are putting it exactly where it needs to go. Recently we bought a new spreader, the Amazone ZA-TS 4200, just to become more accurate with our spreading.”

“Our new spreader has loadcells and precise variable rate capacity, and it also gives us section control. It is definitely an improvement from our previous spreader. It is a lot more precise, with the headland-management for example. It will not spread fertiliser over the fence. It will only spread to the boundary of the paddock. There is no wastage. And thanks to the section control, it can adjust the spread-pattern if you come into a triangle. That way you are not over-spreading anything.”

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More efficiency instead of more fertiliser

Mr Nichols says the farm chooses to work more on efficiency, rather than to use more fertiliser to improve yields. “We want to be more accurate and make sure that fertiliser is being put on, when it needs to be put on.”

We want to have some data behind us, so we can make the right decisions

“We also are doing more on soil testing as well. That’s how we know what is needed to put on. We don’t want to be blanket-spreading everything in some fields. Because that is what we often have been doing for the last ten years. We want to have some data behind us, so we can make the right decisions. Fertiliser is too expensive to throw around.”

Soil tests are not cheap, Mr Nichols says. “But when we do them, we save on fertilisers. And we are also getting extra yields from our crops.” Redbank Farm uses grid sampling soil tests, and custom makes its grids.

Fertiliser prices are also connected to fuel prices, Mr Nichols points out. “Obviously, it takes energy to make fertiliser. Producing nitrogen takes a lot of natural gas. And with high fuel prices, freight is also dear and running a tractor is expensive. It is a double-edged sword.”

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Higher commodity-prices could help offset the costs

Mr Nichols explains that higher commodity-prices could help offset the costs. “It is looking good at the moment. The outlook is promising, with prices going up. Since potatoes are very important for Redbank Farm, soil tests are mostly done for potatoes. They are the biggest fertiliser user. That’s where the farm can make the biggest difference in bringing the paddocks up to an even yield.”

We do 26 hectares of potatoes, so we are a quarter of a million dollar in the red

“Our biggest costs are in potatoes. We have just been planting some of our potatoes. I just have entered all my data. We are sitting at nearly 10,000 dollar per hectare, spent on the crop. That’s a huge investment. Whereas three years ago, the costs were around 5,000 or 6,000 dollar per hectare. And that is before the crop is even out of the ground. We do 26 hectares of potatoes, so we are a quarter of a million dollar in the red. But potatoes are our biggest crop, and that’s where we potentially get the biggest returns. But you also have the biggest risk, because you have the biggest outlay.”

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High fertiliser prices ‘the new normal’

Mr Nichols does not expect fertiliser prices are going to come down to their previous levels. “They might drop 10% to 30%. But I think the high prices are the new normal, which is a bit of a worry. Obviously, fuel prices are not coming down. There are still major disruptions in Europe, where countries were depending on Russia for their natural gas. This will drive the price of urea, and that’s why I don’t see the price coming back, especially with Europe going into winter. It’s all a bit frustrating really.”