Will fertiliser scarcity harm farm economy?

Last updated 05:00 19/06/2009

About 45 kilometres out of Napier on the way to Taupo you'll get to a place called Te Pohue, solid sheep and beef farming territory. The land's not suited to other more intensive uses, so sheep and beef it is.

Te Pohue is where Bruce Wills farms and he, like others in the district, has drastically reduced his sheep flock. With fewer numbers, Wills can achieve a heavier ewe and command a better price at market.

Beef, says Wills, who is a  Federated Farmers' meat spokesman, is a little easier on the land and back pocket in terms of irrigation and other costs,  a particular concern after many lean years. Water is always an issue on the East Coast, but three years of drought has made it particularly acute.

All the more need, then, for fertiliser. All farms need fertiliser, but hilly, water-starved country like Te Pohue, which struggles to achieve the output of the lush lowland paddocks of Southland, Waikato and Taranaki, needs the stuff more than most.

Wills won't fertilise his fields this year. At $392 a tonne for superphosphate, it's unaffordable. To put that in perspective, in April last year it was $261 a tonne. For Wills, it's uneconomic to fertilise until superphosphate drops below $300.

He freely acknowledges he's running a risk. If Wills skips fertilisation for longer than one or two years, he risks significant damage to his fields, the engine room of his farm. Most other farmers around the country, according to agricultural analysts, are making similarly hard decisions.

Driving the price rises is resource scarcity, global demand for food (particularly among the rising Asian middle class) and growing thirst for alternative energy sources. Increased production demands greater fertiliser use.

Before the financial crisis, buying a tonne of fertiliser ingredient diammonium phosphate (DAP) would set you back more than an ounce of gold. DAP, which peaked at more than US$1200, and urea prices have since fallen but this has yet to feed through into the cost of market fertiliser. Manufacturers have scaled back production, stabilising prices, but potash is still at elevated levels, according to the Rabobank Agribusiness Review.

Wills may get his wish of superphosphate for less than $300 a tonne next year, but that price is unlikely to stay low in the medium to long term. Demand, strangled by high prices and financial distress, may be manageable but scarcity isn't.

A fascinating but alarmist piece in Scientific American by David Vacari, a US agricultural scientist, points to a looming crisis in production of phosphate, which comprises about 12 per cent of every bag of fertiliser. Vacari writes like a true Green believer, but the bare bones of his narrative is worth a read and justifies his alarmist language.

Nearly a third of global phosphate production is mined. The world's biggest producer is China, followed by the US. More than 10 per cent of global mined production comes from pits in Tampa, Florida, which have a shelf life of only 20 to 30 years. Other major producers are South Africa and Morocco. The North African country holds 40 per cent of world reserves, making it (hilariously) the ''Saudi Arabia of phosphorus''.

''Although Morocco is a stable, friendly nation, the imbalance makes phosphorus a geo-strategic time bomb,'' writes Vacari. Blimey. Maybe he's right but I can't see the US invading Morocco on the false premise of weapons of mass destruction, no matter how high the price of fertiliser goes.

But Vacari's point about phosphorus scarcity making peak oil seem a distant prospect is well made. Recoverable reserves of phosphate are 15 trillion tonnes, about enough to last a reassuring 90 years at today's rate of consumption.

The world's food and energy sectors, however, are chewing up the stuff. A UN report points to bio-fuel production, which will displace 21 million hectares of food crops by 2018 when an extra 70 million mouths will need to be fed.

The UN is estimating an annual global increase in fertiliser use of 1.7 per cent in the next three years. But it concedes that global politics, bio-fuel production and other unknowable factors make its prediction guesswork and, possibly, on the conservative side.

Already, the world's second-biggest producer of phosphate, the US, is importing the stuff, presumably from Morocco because China, cognisant of its own exponentially expanding fertiliser needs, has slapped a high impost on exports.

New Zealand, apart from a tiny urea plant Ballance Agri-Nutrients operates out of Kapuni, Taranaki, imports all its fertiliser ingredients. Widespread Energy is investigating mining prospects on the Chatham Rise, 600km off the Canterbury coast.  Featherston Resources, which mines diatomite near Dunedin, hopes to bring a local fertiliser to market later this year. But that's it.

Farmers looking for a silver lining will find none. In the short term, the price of superphospate will drop but longer term, persistent high prices seem a certainty.

12 comments
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Germelou   #1   08:45 am Jun 19 2009

making it (hilariously) the ''Saudi Arabia of phosphorus ???? What's hilarious about the situation?I do not think anyone sees the humor in it. Morocco is a friendly nation and should be helped to secure its borders and be made even safer. All it takes is for mercenaries such as the Polisario to take up arms and prices of Phosphates will soar. Think about it. It is one thing not to be able to drive and quite another not to be able to eat. The Western Sahara issue, a product of Spanish colonialism and Cold War needs to be put to rest once and for all and Morocco needs to be supported in its quest to recuperate its territories lost to Fascist colonial Spain and murderous French Algerian Authorities

angelino   #2   05:42 pm Jun 19 2009

Well said Germelou!

pp   #3   04:35 pm Jun 22 2009

If farmers had to pay for the environmental cost of fertilisers, they would never use them. But then farmers in nz have a long history of using the land for profit at the expense of the environment. This, compounded with the initial aquisition of land by confiscation and theft, leaves farmers as amongst the biggest vandals in the country.

seth   #4   03:02 pm Jun 23 2009

@pp - so what do you tell yourself when you're tucking into roast lamb, or beef mince or cheese and crackers? Get off your high horse.

jake   #5   04:39 pm Jun 23 2009

Seth - does the end justify the means? pp makes a valid point. Many farmers have contributed significantly to environmental damage. Are you a farmer?

Ludwig   #6   08:27 pm Jun 23 2009

pp - ignorance is never in short supply in this country. No doubt, you drive a vehicle (spewing huge volumes of toxins, carcinogens, etc, into the air we breathe daily), pollute our waterways (with your sunlight, palmolive soaps, shaving creams, persil, and other eco-toxic materials), and pollute and use up the world's limited resources (by shopping at the Warehouse, Countdown and numerous other retail outlets no doubt, to satisfy your "needs".) Or maybe you are not a modern "consumer"? Recycle all your mountains of plastic and steel and aluminium and convince yourself that you're "saving the planet". Very funny. Think about this as you commute for hours every week, going to your meaningless, paper-shuffling job (which is REALLY helping to turn the planet around of course...) I agree, real costs will have to be factored into produce in the future - so if you want "free range" eggs and no animals in pens, then Kiwis will need to adjust to eggs at $12+/doz, milk at $5+/2L, etc. No doubt, the same no-hoping whingers will be complaining again and expecting working for families and other parasitic welfare schemes to take care of them. "Land by confiscation and theft"....you're referring to the entire world aren't you? You only need to go back 60-70 years (let alone 150yrs+) in Europe and elsewhere to find land "theft" and "confiscation" on a major scale (unlike the minor scale in NZ). Does the whole world stop and look back at all the injustice? No, they move on and get on with it. Every generation that lives off the hard work and backs of others is doomed to failure (proven over and over throughout history). Injustices abound, but that's life - going back centuries will never, ever make up to THOSE people affected (i.e. dishing out land, etc, to some people 20 times removed and mixed with 5-10 other races centuries later is a joke and achieves no justice in any sense whatsoever. God will have taken care of that for us long ago). But, then again, it's always somebody else's fault, and I have a "right" to live in the "manner in which I have become accustomed on the entitlements that the state has allowed me". The West has long passed its "peak" and glory, and "nothing fails like success" as they say.

Kevin Campbell   #7   09:25 pm Jun 23 2009

pp

What a crap environmentalist wank comment that was.

Farmers in nz have an even longer history of keeping the economy going in a financial crisis.

You probably think farmers produce 50% of NZ's greenhouse gas emissions too.

jake   #8   11:51 am Jun 24 2009

Economy vs environment - a fair battle. Which is more important to us? pp asks a fair question. Just getting p-ed of at her /him does not answer much except to show that people have real sensitivities re this topic. Farm use of fertilizers has caused damage in a variety of ways. We can't deny that can we?

Matt long   #9   03:37 pm Jun 24 2009

FYI it works like this; Government agencies tell farmers how to farm including mandating the use of DDT at one point, farmers follow the Govts directions. Then ignorant Greenies try to crucify farmers.

pp   #10   04:33 pm Jun 24 2009

So farmers are just doing what they are told by the Govt- and therefore are not responsible for the environmental damage that occurs?

Ignorant greenies or ignorant farmers Matt? Surely most farmers are not that thick.

Damage is damage.


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