Supporting farmers amidst the rise in fertiliser costs
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Unprecedented post-pandemic demand coupled with the impact of the conflict in Ukraine and the resulting sanctions on Russia and Belarus, two of the world’s biggest potash producers are combining to drive up the cost of fertiliser.
Added to the storm clouds are the rising energy prices which has led to fertiliser production in some corners slowing down, which in turn is feeding into the rising costs.
Locally farmers would have expected to pay between £250 and £300 per tonne of fertiliser back in the Spring of 2021, this then rose to between £650 and £750 in the Spring of 2022. The price has continued to steadily rise throughout the year with farmers now paying around £850.
Worryingly it looks as through the price could break the £1,000 per tonne mark come Spring 2023 and when you consider the fertilizer usage on the average grassland Northern Ireland farm it means farmers overall bill will increase significantly on last year’s prices.
When you consider this, it is easy to understand why food prices are escalating around the globe. Everyone is seeing products like milk, butter, eggs and bread rising sharply and this is likely to continue in the coming months.
Some farmers are looking ahead to the continuing, spiralling Spring costs and are planning to purchase fertilizer now to have it in stock.
It may seem like a sound judgement call, especially if you can afford the outlay in the face of other pressing financial demands, but it is one which requires due consideration.
If you are planning to purchase fertiliser now, our advice would be to speak to your insurance broker to make sure you have the correct level of cover in place.
Fertilizer is normally insured within the description of Produce and Deadstock. The volatility in fertiliser pricing means that a sum insured selected last year may now not be adequate.
It would be nothing short of a financial disaster for a farmer to bring tonnes of fertiliser onto their farm now in time for sowing next Spring only to lose it to something like fire or theft.
Also, if the farmer does not have an adequate value declared then any insurance claim may be reduced due to under-insurance, creating a financial hole for the farm business to absorb.
The same scenario exists for farms storing silage, hay and straw as these prices have also increased. The expectation is that these commodities will become more expensive as we enter the winter months and demand gets greater.
At AbbeyAutoline we are passionate about supporting our farming community, which is why we always encourage farmers to speak to their broker to ensure they have the correct cover in place.
The understandable logic when urging people to consider increasing their cover or sums insured is that, as a result, premiums will automatically jump up significantly, but sometimes these adjustments don’t cost as much as clients may think.
The increased cost of having adequate sums insured and cover is a lot easier to manage than the cost of being underinsured or not insured at all in the event of a fire or theft on the farm.
Get in touch to see how we can help your farm business today. For more information visit www.abbeyautoline.co.uk/farm-insurance/