14/01/2009 - 22:00

Farmers hold off fertilisers

14/01/2009 - 22:00

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INDUSTRY leaders are calling it a Mexican stand-off between grain growers and suppliers in the fertiliser market.

Farmers hold off fertilisers

INDUSTRY leaders are calling it a Mexican stand-off between grain growers and suppliers in the fertiliser market.

While the astronomical prices of last year have eased, many farmers still believe them to be too high and are putting off buying in the hope prices will drop further.

"It's still a long way to go. It's a bit of a Mexican stand-off at the moment," WA Farmers Federation president Mike Norton said.

The easing in prices has forced major nitrogen producer China to drop its contentious 185 per cent tariff to 10 per cent in less than a month.

CSBP managing director Ian Hansen said the company had adjusted prices to reflect global trends and had also introduced downward pricing protection, which enabled customers to pay the lowest price in the lead up to seeding.

Mr Hansen said the company would only import fertilisers based on orders. This, coupled with delays in fertiliser collections, might result in shortages if farmers waited too long to order.

"Delays in fertiliser nominations by farmers could potentially result in fertiliser supply constraints in the coming season," Mr Hansen said.

Pastoralists and Graziers Association grains and economic policy director Sheldon Mumby said farmers are adopting a wait and see approach.

"At the moment, we have people saying, 'we're going to see where those prices go, we reckon they're going to go down'," he said.

"But when the biggest agricultural countries in the northern hemisphere, such as Russia and Canada, came onto the market in March, prices would swing upwards sharply. What we don't want to see is for prices to skyrocket like they did last year," Mr Mumby said.

Avon grain grower Richard Marris said many farmers had still not placed their orders in expectation that prices would drop.

"Farmers are definitely holding back," he said.

He knew of cases where, if farmers ordered fertiliser at current high prices, they would barely make a profit.

Meanwhile, a new player in the WA market, which is taking on major suppliers CSBP, Summit Fertilisers and United Farmers, could herald lower prices.

Independent import co-operative Direct Farm Inputs, set up jointly between South Australian farmer Leigh Huxtable and Manjimup businessman John Hurley, hopes to expand operations to WA by mid-year.

After launching in SA last December, the company has already proven it can impact prices. Selling fertiliser at $1,030 a tonne, Incitec Pivot followed by dropping its prices in that market by as much as $600 a tonne within days.

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