Fertilizer prices

In the last decade the over-all index of wholesale prices of industrial goods has risen by 22%—to pick a familiar and specific item, automobile prices were up almost 40%. But over the same period, fertilizer prices gained 7%, pharmaceutical preparations only 3%, and drug and pharmaceutical bulk material prices actually dropped more than 53%. 1958 prices throughout the chemical industry averaged about 6% over 1948, a smaller increase than in all but two of the other 12 industries included in the government price index. 

Farmers of the less-developed regions tend to be very sensitive to fertilizer price increases, whereas farmers who pay less for fertilizer relative to their total expenses tend to be relatively insensitive. For these reasons increasing fertilizer prices tend to decrease use disproportionately for farmers who can least afford the reduced production caused by lower fertilizer use. 

Several factors affected fertilizer production during the 1979/80 to 1994/95 period. Depressed fertilizer prices, economic and political reforms, structural adjustment programs, raw material shortages, and depressed demand were some of the important contributory factors. 

The slow growth of the 1980s converted into a r2 >id decline in the early 1990s. Between 1988/89 and 1992/93, global fertifizer use decreased at an annual rate of 3.6%. This led to an increased surplus in the marlwt, depressed fertilizer prices, and forced closure of some fertilizer plants. 

After 1988, many of the countries of Eastern Europe and Eurasia initiated political and economic reforms, which led to the demise of communism and movement toward the establishment of democratic polities and market-based economies. A series of economic reforms were introduced, under which domestic currencies were allowed to float in the open markets. Consequently, the currencies of these countries depreciated rapidly. Such devaluations followed by deregulation and liberalization resulted in rapid increases in the prices of many commodities. Sudden withdrawal of the government from agriculture, industry, and trade also resulted in the disruption of marketing and distribution channels. Hence, fertilizer prices increased, and fertilizers were not available to the farmers on time. Further, farmers were unable to sell their agricultural produce and have adequate financial resources to purchase fertilizers. Inflationary pressures, inadequate credit arrangements, and poor technical support to new private farmers also adversely affected fertilizer use. 

Fertilizers prices tend to be cyclical and are often quite volatile recent history is no exception. Prices (in US ) of urea, diammonium phosphate (DAP), and muriate of potash (MOP) for the period 1989-95 are shown in Figure 3.10. Prices of all three products declined during the period 1980-87 but have recovered since that time. 

In spite of low international fertilizer prices in the 1980s, many developing countries were not able to reap the benefits of increased fertilizer use because the domestic fertilizer prices increased rapidly due to subsidy removal and devaluatkxi of domestic currency. In Mexico, Zambia, and Turkey, fertilizer prices increased by over 2,0009 5,000% during the 1980-90 period [71. This created a paradoxical situation of declining fertilizer pricey in the world market and increasing domestic prices In several developing countries. 

Initially, decreased domestic demand in. theSG co.un tries created production surpluses, which were diverted to international markets and depressed fertilizer prices. Between 1991 and 1993, urea prices decreased by about 40%. Prices of other products also decreased significantly. Such depressed prices made fertilizer production unprofitable in Western Europe and North America and forced plant closures. 

These catastrophic effects were further compounded by the adverse impact of policy changes in the developing countries. Devaluation and subsidy removal in many developing countries resulted in increased fertilizer prices... 

Since the early 1980s, fertilizer prices (in 1990 constant U.S. dollars) have been decreasing with occasional increases caused by short-term changes (figure 4.2). In 1991, the Gulf War created temporary shortages and... 

Basic technological and technical data collected during the UNIDO workshop on Minifertilizer Plant Establishment, held in Lahore in 1983, show an alternative means of developing the fertilizer industry and allow the preliminary technical assessment of such a concept. However, it is not possiNi to recommend an economical size fertilizer plant if only unit production costs are known. The cost of the marketing and delivery system is a second component of the fertilizer price at the farm gate, and this price should be considered when determining the size of the fertilizer industry operation. 

Existing transportation infrastructure, such as road n works, navigable rivers, and railways, presents a great advantage for locating a fertilizer plant. Today even medium-scale plants should expect to transport more than 1 million tonnes of material per year. Therefore, access to a transportation network is very important for investment costs and future farm-gate fertilizer prices. Constmetion of a 1-km (6-m width) road may cost from US 1-3 million, and no investor would be able to recover these costs from the profits of fertilizer production. Construction of railway or port facilities should... 

Mudahar, M. S. 1984. Fertilizer Prices and Subsidies Policy, (unpublished), IFDC Fertilizer Marketing Management Programme, IFDC, Muscle Shoals, AL, U.S.A. 

It has been proven that a favorable ferdlizer crop price ratio stimulates food production and high returns. Therefore, if crop prices cannot be raised, the only solution is to lower fertilizer prices. This is accomplished by applying fertilizer subsidies. The most common forms of subsidies are ... 

An alternative to fertilizer price subsidies is a erbp price support. Regardless of the form of subsidy appli, ... 

Fertilizer Prices - The required introduction of custom duties and internal subsidies to motivate farmers to increase fertilizer use has allowed the country governments to control fertilizer prices. 

According to the U.S, chemical engineering plant cost index [4], during the past 25 years the unit investment cost of fertilizer plants has risen by a factor of 3, with only a 1.5-2.0 times increase in fertilizer prices. Therefore, a decrease in depreciation cost is not likely for. new plants. New developments in ammonia technology may keep unit investment costs stable for a period of time therefore, present investment decisions in the fertilizer industry may be beneficial to the investor in comparison with delayed construction. 

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