- Fertilizer outlets are empty. Farmers alarm that as soon as the assortment appears somewhere, it immediately disappears. And the prices increased by several hundred zlotys in two weeks
- This raises concerns that there will not be enough products for everyone, which means lower yields and problems for farms
- Information about the reduced production of Grupa Azoty and Orlen’s Anwil increases the anxiety even more. The ministry assures, however, that despite the downtime, there should be no shortage of fertilizers. Azoty also sent us a reassuring answer
- Still rising fertilizer prices inevitably lead to a decline in agricultural production and higher food prices. According to experts, the inflationary peak in the food category is still ahead of us
- More such stories can be found on the main page of Onet.pl
Farmers are alarming that fertilizer outlets are empty. And this is the moment when fertilizers are in great need, among others producers of rapeseed or winter cereals. “Farmers are observing with concern the drastic shortage of fertilizers at points of sale. The problem concerns especially multi-component fertilizers, which ensure optimal proportions of nutrients for plants” – warns the National Council of Agricultural Chambers in its statement.
Other organizations also confirm shortages in stores. – Shortages are visible and panic is visible on the market. As soon as fertilizers appear somewhere, farmers with cash decide to buy them quickly so as not to stay on the ice. The messages that we receive from representatives of commercial companies indicate that fertilizers may soon run out, and the prices are already four times higher than in the period before last year’s increases. The most lacking is nitrogen fertilization, as well as phosphorus and potassium fertilizers, which we are already using in August – says Juliusz Młodecki, president of the National Association of Rapeseed and Protein Plants.
According to the poll of Tygodnik Poradnik Rolniczego, fertilizers in just two weeks they went up by another PLN 400. And nothing foreshadows the market calming down. This is because farmers are afraid of even deeper deficits due to the shutdown of part of the Grupa Azoty Group’s production. The largest Polish producer announced that it is forced to stop some production lines. The reason is huge gas prices, which translate into a decrease in profitability. It was decided to temporarily stop the operation of the installation for the production of nitrogen fertilizers, caprolactam and polyamide 6.
The Ministry and Azoty are reassuring
The Ministry of Agriculture reassures, however, that although the market situation is difficult, there should be no lack of products supporting cultivation. – I would like to remind you that at the moment there are many more fertilizers in the Grupa Azoty’s warehouses than in the comparable period of last year, so it will be possible to buy these fertilizers. Well over 100,000 tonnes are in stock and are still available from dealers who are authorized sellers of Grupa Azoty. I hope that after these technical reviews, let’s call it that, the gas situation will calm down and fertilizer production will return. There is enough fertilizer for the autumn season, but we must remember about the future and what it will look like in spring – Henryk Kowalczyk, Deputy Prime Minister and Minister of Agriculture, spoke on the air of the Polish Radio Three.
Also read: Not only sugar and coal. These goods may also be missing
Azoty also has a calming effect. – Until August 22, the Grupa Azoty Group kept production at its maximum possible capacity, even in the face of significant restrictions or a complete stoppage of production by major European producers. Deliveries of fertilizers to the domestic market are a priority for Grupa Azoty and in the first seven months of 2022 they were significantly higher than in the corresponding period of the previous year and previous years. The availability of fertilizers on the domestic market is determined, apart from the production by the Azoty Group, also by the supply from our domestic market competitors and the import, states the spokeswoman for the group Monika Darnobyt in the reply sent to us.
Anwil says STOP
On Tuesday, the second largest domestic producer of fertilizers – Anwil also stopped its production. “Due to the unprecedented and record increase in natural gas prices in Europe, ANWIL decided to temporary suspension of the production of nitrogen fertilizers. The company monitors the situation on the raw materials market on an ongoing basis. As soon as the macroeconomic conditions in the gas market stabilize, production will resume, “the statement said.
Behind everything are huge jumps in gas prices. Only during the week they increased by 41 percent. from EUR 200.4 / MWh (August 15) to EUR 282.8 / MWh (August 23). In turn, since the beginning of the war in Ukraine, the prices of this commodity have jumped by 218 percent.
Farmers are concerned
However, farmers are not calm. – Information about the suspension of production by Azoty will certainly increase the nervous reactions of farmers. There is also no doubt that the current market situation will translate into less fertilization. And this will inevitably lead to a decline in production and thus probably lower earnings of producers – estimates Juliusz Młodecki.
At the same time, they raise objections to subsidies for fertilizers introduced. They point to too late disbursement of funds, as well as a scale that does not relieve farms enough. KRIR calls for faster payouts.
“Many farmers, counting on the subsidy for the purchase of fertilizers promised by the Polish government, did not give up fertilization. These farmers invested a lot of money in the purchase of fertilizers, counting on a quick return of some funds in the form of a subsidy from the state, in order to be able to invest them in preparations for the next sowing and related work “- stated in the statement.
– It is good that there are subsidies for fertilizers, but their amount is impressive, only looking at the overall scale of the aid, i.e. over PLN 3 billion. However, from the perspective of a large commercial farm, the amounts are small in view of the overall cost increase. AND most sellers, after the introduction of surcharges, immediately raised their prices by PLN 300-400 – adds Juliusz Młodecki.
More expensive at purchases, more expensive on shelves
Fewer products on the market and more expensive fertilizers inevitably lead to higher prices for crops. – Therefore, reduced profitability of production may have a limiting effect on the production in the case of some agricultural activities. Theoretically, we should observe such a regularity, especially since limiting the production of fertilizers does not only apply to our country. Nevertheless, it is difficult to assess the scale of the supply decline due to the uncertainty on the market and the possible length of production downtime, says Mariusz Dziwulski, agricultural markets expert at PKO BP.
They will first touch the purchases. There, the amounts are already very high, as evidenced by the latest GUS data. Last week, the office said that in July, the prices of agricultural products were 51.6 percent higher. compared to last year.
According to experts, the inflationary peak in the food category is still ahead of us. – We maintain our forecast that the dynamics of food prices will reach its local maximum in October this year. at the level of approx. 18 percent. compared to last year, so we have not yet reached the top – says Dr. Jakub Olipra, agricultural markets expert at Credit Agricole.
The fulfillment of bad forecasts
Further increases would be a fulfillment of the gloomy announcements made by the representatives of the food industry, with whom we spoke on the pages of Business Insider Polska. – Certainly, we will expect further increases of even a dozen or so percent – announced at the end of June the member of the Kaufland management board, Marcin Łojewski.
She spoke in a similar vein in BI, Marta Pilczuk, head of Kraft Heinz Poland. – The inflation we are experiencing now stems from the rise in raw material and packaging prices from last year. This was a growth virtually unheard of in recent history. This crisis began around September or October. However, the issues related to the war have not yet translated into prices in stores for good, she said in May.
Author: Grzegorz Kowalczyk, journalist at Business Insider Polska