One of the UK’s leading farming bodies has questioned the dominant status of CF Fertilisers in the agricultural sector, following the company’s proposed closure of its manufacturing plant in Ince, Cheshire.
The NFU’s deputy president Tom Bradshaw told City A.M. it has had long-established “concerns about a monopoly producer being in place in the UK fertiliser market” – particularly over pricing.
He said: “Clearly there are imports, so it’s not a pure monopoly market because there is the availability of inputs, but the price transparency of those inputs is absolutely critical to keeping the market honest.”
“When you’re in a position where you’ve only got one producer, that’s never a good position to be in. Competition is always a good thing.”
CF Fertilisers made headlines last week after it revealed plans to permanently close one of its two fertiliser plants in the UK, and cut hundreds of jobs in a vast restructuring of its operations.
It justified the move as essential to ensuring the business remains profitable and sustainable, so that the company can still supply fertiliser, CO2 and other industrial products to its domestic customers.
This comes after weeks of negotiations with the government last autumn, after it initially closed down both its plants amid soaring energy costs, before agreeing a new deal that saw its plant in Billingham, Teeside, return to operations in September.
However, the Ince plant has been closed for nearly nine months, before CF Fertilisers UK announced last week that it was proposing to scrap the facility.
Currently, CF Fertilisers is responsible for 60 per cent of the UK’s CO2 production, which is used in food and beverage packaging, fire extinguishers, foaming rubber and the humane slaughter of animals.
Alongside CO2, the company is also the leading domestic manufacturer of ammonia and other fertiliser products– key resources for the agricultural sector.
For instance, the company has been the only UK producer of ammonium nitrate fertiliser since 2015.
It was also a part-owner in the joint venture for GrowHow – the predecessor business – which had been the only UK producer for nearly a decade.
Bradshaw raised doubts over CF Fertiliser’s claim the decision won’t affect the production volumes of key agricultural products.
This includes salt-based and compound fertilisers, which both have nitogren, potash and phosphate in them – with Brasdhaw questioning the ability of CF Fertiliser to make those goods at its Billingham facility.
He said: “I think we would like to see the evidence it won’t effect production levels…While the vast quantity of products can be manufactured, some of the more technical products won’t be able to be made out of the Billingham plant.”
Bradshaw played down the prospect of panic buying among farmers despite the potential for shortages, due to the historically high prices of fertiliser – which peaked in March and remain historically high, with ammonia trading at £716 per tonne this month.
Industry experts expect high fertiliser prices to be baked into the market for at least two years following Russia’s invasion of Ukraine, with both countries being key producers amid conflict-driven supply disruption.
He said: “I don’t think you will see panic buying or sort of hoarding because it’s just simply too expensive. What we do see at these higher prices is that the ultimate fertiliser levels generally fall, and that means it’s likely we’ll end up producing less and less crop as we move forward.”