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June 16, 2009

Fertilizer prices expected to increase in 2010

by Wendell Roelf

Norway's Yara International expects fertiliser prices to increase in 2010 as the global agriculture sector rebounds, the chief executive of its South African unit said on Monday. The economic crisis has dampened global consumption of agricultural goods and fertiliser, but increased demand and investment in the farming sector in Africa, could help see fertiliser demand rise.

"I don't think we will see a spike like last year in 2008 when you saw the oil price rise... If demand will grow faster than supply then prices will come up," Willem Sloot said on the sidelines of an African agriculture conference. "I think actually that the agricultural industry and activity will improve as from July this year and demand for fertilisers will come back," he said.

Sloot said a global goal to increase food production in Africa, the world's poorest continent, would mean more use of fertilizers, where the average usage of fertilizer was 10 kg per hectare -- 50 kg in South Africa and more than 100 kg in Europe.

"It (demand) could easily triple or multiply by five," Sloot said.

Yara recently paid $225 million for a 50 percent stake in a joint venture with the Libyan governemnt and private investors. The plants produce over 600,000 tonnes of ammonia and close to 1 million tonnes of urea, two of the main fertiliser ingredients.

"We (also) plan to invest in two ports in Dar es Salaam and Beira (Mozambique) with around $30 million each ... to set up large bulk terminal facilities to handle imports for fertiliser which would reduce costs," he said. "We hope to start up the Beira project in the first quarter of 2011... and Dar es Salaam later in 2011," he said.

Reuters

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