Fertiliser rise blamed on biofuel

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The global rush to grow biofuels has raised fertiliser prices for Kiwi farmers by up to 80 per cent in the past two months.

Hawke's Bay-East Coast sheep and beef farmers, who apply fertiliser annually to maintain grass growth, say the price rises have added a worrying component to their balance sheets - on top of depressed prices for meat and wool, a high dollar, and increases in fuel, transport and interest rates.

Federated Farmers spokesman Kevin Mitchell said fertiliser prices had "rocketed" as countries such as China soaked up global supplies to grow vast tracts of biofuels to replace fossil fuels.

The 80 per cent increase in DAP (di-ammonium phosphate, the main fertiliser used by the global grain industry) had forced many farmers to stop using it, Mr Mitchell said.

The price of superphosphate had not increased as sharply, but even basic urea had gone up 20 per cent.

A farmer could skip fertilising for one year after 10 consecutive years of application, but the following year would notice a 10-15 per cent decrease in production, Mr Mitchell said.

"Fertiliser is a major driver of our production, so you just can't afford not to put it on," he said.

However, farmers had no way to recover the extra cost.

A drop in the Kiwi dollar would lift the prices farmers received for meat and wool - but it would also lift the price of imported fertiliser, Mr Mitchell said.

"We get bitten either way. It's a real worry."

One farmer estimated it was now costing about $50 a hectare each year for the basic fertilisers needed to keep grass growing on East Coast farms.

Those growing higher-grade "sugar" grasses to reduce methane production in stock could now be paying $100 a hectare, and grain-growers $200-$300.

Many farmers would be struggling to make a profit for Inland Revenue to tax this year, he said.