June 19 2013 Latest news:
Sunday, March 10, 2013
A unique fertiliser purchasing pool has been launched by farmer co-operative AtlasFram Group.
The pool will enable co-operative members to benefit from competitive prices for urea, reduced exposure to volatile markets and giving guaranteed delivery.
Group business manager Ashley Gilman said markets for key farm inputs and outputs have become much more volatile and the pool is a “significant development”.
“Unlike the grain sector, there is no highly-developed futures market for fertiliser, so prices cannot be fixed in advance, which meant that we had to develop a new approach,” he said.
“AtlasFram already helps Members to mitigate risk in a number of ways, for example by securing known prices for key inputs such as fuel, feed and electricity, together with key outputs such as grain. The fertiliser pool builds on that strategy.
“Given AtlasFram’s strength in crop marketing, the popularity of our grain pools and their success in achieving excellent prices we decided to investigate whether similar principles could be applied to the fertiliser market. Unlike the grain sector, there is no highly-developed futures market for fertiliser, so prices cannot be fixed in advance, which meant that we had to develop a new approach.
“Our fertiliser purchasing pool effectively mirrors our grain marketing pool. Rather than selling grain progressively throughout the pool period when prices are at attractively high levels, with the aim of generating a good overall return, we will purchase fertiliser when prices are at relatively low levels to achieve a favourable overall cost per tonne.”
He added: “Fertiliser prices can move very rapidly and even if you could pick the exact ‘bottom’ in the market the lowest price might only be available for a very short time. To benefit you would have to monitor the situation constantly, which is impossible for individual farmers to do.”