Ravensdown in a 'tight period' as cash-strapped farmers reduce fertiliser use

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Ravensdown in Napier.
Photo: Google Maps

Fertiliser use is continuing to drop as cash-strapped farmers put red lines over their budgets.

Fertiliser Association of New Zealand data shows steady declines in the use of nitrogen, phosphate and potassium fertilisers in New Zealand in recent years.

That has been driven by a mix of adverse weather events, high inflation and commodity prices, and soaring farm costs.

Mike Whitty, chief operating officer of fertiliser co-operative Ravensdown, said those factors had driven a substantial reduction in fertiliser use, especially over the past two years, reflecting the current economic situation.

“Farming is having a tough financial time – particularly around the price of produce that has come down quite significantly, that’s having an effect on our customers,” Whitty said.

“Profitability was quite positive in farming, and then we saw really significant increases in costs coming through, including nutrients, and that at the same time with farm produce prices coming off, has reduced fertiliser use.”

He said the co-op had to make adjustments and take cost-saving measures to respond to the decrease in sales.

A restructure in the past year saw 18 percent of its workforce lose their jobs, he said.

“We’ve certainly got a smaller number of people onboard now than we did this time last year, so we’re always looking at cutting the costs really to meet what the market’s doing. And the international market is such a critical part of that because the majority of our costs are off-shore in purchasing products and shipping and currency.”

Whitty said the co-op was watching the situation around cargo trade disruptions in the Red Sea, but had not yet been impacted.

“We don’t use the Red Sea region and from a container point of view, we’re out of season for containers out of Europe, so we haven’t seen an impact at this point of time, but they’re things we’re always watching because of the wider impacts they may have on costs or availability.”

He said fortunately global fertiliser prices were coming off record highs too, dropping more than 50 percent over the last year – which would support reducing inflation and improving affordability on farm.

“We see it as the bottom, and things will improve … looking at the dairy situation and the payout, it’s going in the right direction,” he said.

“These are very cyclical occurrences and we’re positive about the future – it’ll just take some time and it’s really that huge amount of inflation we’re seeing on farm and internationally and domestically – until some of that comes off, then, and prices improve, it’ll just be tight for a period.

“But after that we do see positive outcomes for the ag industry.”

Stats New Zealand figures showed more than 21,000 farms use agri-nutrients in New Zealand.