The price of
superphosphate fertiliser could reach $700 a tonne by
Christmas, according to the head of one of the country's
leading manufacturers and retailers.
If the prediction of Ballance Agri-Nutrients chairman David
Graham is correct, the price of agriculture's fundamental
base fertiliser would have increased 218% in 18 months and
49% since June.
A year ago, superphosphate was selling for about $220 a
tonne, but Mr Graham said $700 a tonne was not unrealistic
given soaring international prices.
Pushed on a possible time, Mr Graham said Ballance had
quarterly price reviews and with the way ingredient prices
were rising, it could be reached by Christmas.
Other fertiliser prices would also continue to rise driven by
soaring global demand for fertiliser as countries secure
their own food production in the face of shortages.
Mr Graham said United States farmers were sowing three corn
crops in two years while land that has been set aside for
conservation and environmental reasons was being brought back
into food production.
"We cannot see these global prices coming back in the near
future and as a consequence we expect further price increases
and a reduction in local demand."
Company sales in the past financial year were up 150,000
tonnes at 1.54 million tonnes.
This was a sign that farmers were stockpiling product ahead
of looming price rises, said Mr Graham.
Ballance this week reported a record financial performance
for the year ended May 31, increasing its pre-rebate trading
profit by a massive 135% to $78.3 million.
Mr Graham said the company would pay an average rebate and
dividend of $36 for every tonne of fertiliser purchased.
The previous year's pre-rebate profit was $33.4 million but
Mr Graham said the company last year set manufacturing, sales
and rebate records.
Turnover was up 31% to $651 million which Mr Graham said
allowed Ballance to return $41.3 million to shareholders
through dividends and rebates, a 67% increase on the $24.7
million paid the previous year.
Mr Graham said it was too simplistic to attribute the
operating surplus on rising global prices, saying Ballance
held its super phosphates prices throughout autumn in the
face of rising input costs.
"Our retail prices are always very competitive in the local
market. Furthermore, the big industry price movements came
after balance date."
Nutrient budgeting required by dairy farmers actually
resulted in less fertiliser being applied, but that was
balanced to some extent by the record milk payout giving them
more disposable income.
Fertiliser requirements on dairy conversions occurring in
Southland had also helped sales.
The company's urea manufacturing plant in Taranaki was a
significant contributor to Ballance's result, and during the
year $10 million was invested upgrading manufacturing
facilities.
It has taken steps to strengthen its balance sheet ahead of
what he called "a challenging period" for the global
fertiliser industry.
Shareholder equity was 14% higher at $303 million, assets
were up 12% at $475 million and equity was 64%.
Earlier this week, arch-rival Ravensdown reported a $40
million pre-rebate and pre-tax profit and said it would
return $36 million to shareholders in rebates and bonus
shares.
Revenue was $672 million from sales of 1354 million tonnes of
fertiliser, 650,000 tonnes of lime and sales of
agri-chemicals and animal health products.
