Around US$ 1,500 a tonne totally free on board (FOB) at Point Lisas, it’s the most costly it has ever been.
And it’s fuelled, obviously, by the Ukraine war.
Rates could even more increase in the coming months as winter season paves the way to spring, which is the start of the planting season.
For an effective crop, soils need nurturing. So the global need for fertiliser is high.
According to the International Food Policy Research Study Institute, Russia represent 15 per cent of worldwide sell nitrogenous fertilisers, 17 per cent of worldwide potash fertiliser exports and 20 percent of the global gas trade, an essential component in producing fertilisers.
And fertiliser, naturally, is necessary for food production.
The United Nations Food and Farming Organisation (FAO) tasks that the cost of fertilisers will increase by 13 percent in 2023, which could cause food production expenses to increase, while reducing yields and outputs for the 2022-2023 crop seasons.
As it stands, there are ten ammonia plants in T&T: 2 by Yara– Tringen 1 and 2, four by Nutrien Trinidad, one by N200, CNC, PLNL and one at MHTL’s AUM complex.
Nutrien Trinidad, a subsidiary of Nutrien, is T&T’s largest manufacturer of ammonia and represent more than 35 percent of its international production portfolio.
Its handling director, Ian Walcott, stated in order to fulfill the high international need for fertiliser, the business is attempting to maximise its output.
In T&T, he observed that all Nutrien’s plants are operating at full capability.
In an interview recently, Walcott told the Sunday Express the business is acutely aware of the effect that high fertiliser costs might have on food rates in the coming months.
” What we are seeing is unnaturally high costs in an unnatural market. It’s not sustainable for sure,” said Walcott.
He observed that internationally, Nutrien increased production of potash to fill deep space in the market.
On March 16, Nutrien revealed that in action to the unpredictability of potash supply from Eastern Europe, it prepares to increase potash production ability to approximately 15 million tonnes in 2022– an increase of nearly one million tonnes compared to previous expectations.
Most of additional volume is anticipated to be produced in the 2nd half of the year.
” The impacts of this conflict extend beyond Eastern Europe as a disruption in supply of essential agriculture, fertiliser and energy commodities could have implications for international food security,” said Ken Seitz, Nutrien’s interim president and CEO.
” Nutrien is reacting to this duration of unmatched market uncertainty by securely broadening potash production to assist offer our consumers with the crop inputs they need. We continue to carefully keep track of market conditions and will develop our long-term strategies to ensure we use our properties in a safe and sustainable manner that benefits all our stakeholders,” added Seitz.
Walcott explained that for fertiliser manufacturers, the journey is oft-times a cyclical one.
” In 2019-2020, there were very depressed prices, we lost money. We had to take loans to sustain our company,” he informed the Sunday Express.
At that time, Argus Media had actually reported: “Among the essential elements weighing on Trinidad prices over current years has been the downturn in United States import need, as the nation installed its own capability to make the most of cheaper gas. This has, in turn, caused more Trinidadian ammonia being directed on longer-haul shipments to Morocco, France, Belgium, Turkey and Brazil.
” General, Trinidadian ammonia producers are needing to compete more strongly on rates with each other, and with other manufacturers in Russia and southeast Asia, to secure service for contract tonnes in 2021.
” The international market has been struggling with oversupply for nearly two years, and Trinidadian manufacturers appear to have been suffering the most acutely with the lower-price environment. The timing of any prospective cost recovery and whether it can be sustained may prove pivotal to how much capability producers plan to keep line into 2021.”
In September 2020, Nutrien had announced the indefinite closure of among its 4 ammonia plants in Trinidad.
” This suspension of operations is in action to market conditions and lower worldwide rates for ammonia. Two of our ammonia plants and the associated urea facility will continue to operate at optimal capability. Our other plant which was taken offline in May 2020 due to market conditions is expected to come back online as market conditions enhance,” a business declaration had stated at the time.
Now, it’s quite the opposite.
Walcott described it as a windfall. (See table listed below.)
However the company is bewaring about how it invests its additional cash.
” What we are trying to do is pay off our short-term loans and set ourselves up for the future,” he said.
As for the rest, Walcott said it would be invested to upgrade its equipment which he said would look after things in the long term.
He observed that the constant supply of gas continues to be a problem.
Nutrien’s plants are contracted to a specific supply of natural gas from the State-owned National Gas Company (NGC) so it can not merely scale up production.
” Its less than ideal, but we have a healthy supply,” he stated.
Last week, Prime Minister Dr Keith Rowley met with the executive vice-president and CEO of Nitrogen and Phosphate at Nutrien, Raef Sully, at the Diplomatic Centre in St Ann’s. In attendance were Energy Minister Stuart Young, senior vice-president of nitrogen operations at Nutrien Trevor Williams and Walcott.
Why ammonia matters
Previous energy minister Kevin Ramnarine noted the cost of ammonia is the greatest its ever been and it keeps climbing up greater.
” The cost might go even greater in coming weeks as the beginning of spring suggests the thawing of soils in locations like the US, Canada and Russia. When that happens, farmers use fertiliser and thus the need for fertiliser rises. Russian exports of ammonia have actually been interrupted due to the war with Ukraine and some ammonia plants around the world, consisting of two in Trinidad, are down for turnarounds.
” The majority of Trinidad’s ammonia goes to the Port of Tampa in Florida. This is optimum as there are huge potash mines in Florida. Potash is integrated with ammonia to make MAP and DAP fertilisers. MAP is Mono Ammonium Phosphate and DAP is Diammonium Phosphate. However, we are likewise seeing our ammonia going to besiege Europe,” he explained.
” To make MAP and DAP, potash is needed. Russia’s primary ally, Belarus represent 18 per cent of international potash production. Potash is potassium carbonate,” he stated.
He noted exports of potash have suffered because of the sanctions from the EU related to its assistance for Russia.
” This suggests the rates of fertilisers whether it’s ammonia, MAP, DAP, Urea, Urea Ammonium Nitrate or Potassium Nitrate have actually all increased. This will no doubt impact food costs on the racks in T&T,” he stated.
He said the other element driving the cost escalation is logistics.
” The majority of our food imports come out of ports in Florida such as Port Everglades and the Port of Miami. Getting food to these ports in Florida happens by means of haulage trucks and rail. The cost of road transport in the United States has increased due to the high cost of diesel.
” Then there is the cost of freight from Florida to Trinidad. This has increased by approximately 50 percent in the in 2015. This all means that the inflation we are seeing is landing on our ports and there is very little control we have over that.
” It is a worldwide issue that started as the world economy rebounded in 2021 from Covid and was made worse by the Russia/Ukraine war. It might actually get a lot worse as the year advances. What we must be going over in Trinidad and Tobago is how to increase local farming production,” he stated.
What’s going on internationally
The British commodity consultancy CRU reported a couple of days ago that costs for basic materials that make up the fertiliser market– ammonia, nitrogen, nitrates, phosphates, potash and sulphates– are up 30 per cent since the turn of the year, and now exceed those seen during the food and energy crisis in 2008.
CRU head of fertilisers Chris Lawson told CNBC that trade in between Russia and the rest of the world has actually not stopped, however has actually been significantly interrupted as importers and vessel charterers avoid the country, in light of the intrusion of Ukraine.
” In addition, gas is an essential input for fertiliser production. High gas prices have led to a cutting of production in regions such as Europe, additional restricting a currently tight market,” Lawson told the American news organisation last Tuesday.
Meanwhile, sanctions on Russian-ally Belarus have substantial ramifications for the potash market, with Russia and Belarus contributing a combined 40 percent of annual traded volumes.
” Since the start of 2020, nitrogen fertiliser rates have actually increased fourfold, while phosphate and potash rates over threefold,” Lawson described.
” While farmers in developed markets have taken advantage of high agricultural commodity prices, helping to partly offset high input costs, need destruction is significantly most likely due to high prices and supply shortfalls,” he said.
The UN Food and Farming Index reveals food prices are at an all-time high, and Lawson suggested a prolonged period of fertiliser lack will impact longer-term farming yields.
” Offered the already tight grains and oilseeds market, and the importance of both Russia and Ukraine in those markets, food cost inflation is an increasingly popular risk,” he added.
Prior to the risk of lowered products from Russia and Belarus, fertiliser costs had actually already been dealing with upward pressure from international supply chain disturbances, a Chinese export restriction and a Canadian rail strike.
Bloomberg reported recently that a gauge of prices for the nitrogen fertiliser ammonia in Tampa surged 43 percent to US$ 1,625 per metric tonne on Friday– a record for the 29- year-old index.
” The war is pushing up the expense of gas, the primary input for the majority of nitrogen fertiliser, forcing some producers in Europe to cut output. Markets likewise fret that prospective sanctions on Russia, a big low-priced carrier of every significant kind of crop nutrient, might disrupt international trade,” said the Bloomberg report.
” Russia has urged domestic fertiliser producers to reduce exports, even more stiring fears of scarcities. At the very same time, costs for staple crops like wheat, corn and soy beans are skyrocketing, with war in one of the world’s breadbaskets threatening to push millions more into hunger. Increasing costs for farm inputs like fertiliser could further send out the rate of food skyrocketing,” it included.