CF Fertilisers’ ‘monopoly producer’ status questioned by UK farming body
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 PM it has had long-established “concerns about a monopoly producer being in place in the UK fertiliser market” – particularly over pricing – with only overseas imports providing farmers with alternatives to CF Fertilisers.
He said: “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 CF Fertilisers agreed a new deal that saw its plant in Billingham, Teeside, return to operations in September.
However, the Ince plant had been closed for nearly nine months before CF Fertilisers UK announced last week that it was proposing to scrap the facility.
Product availability could be affected by closure, warns NFU
Currently, CF Fertilisers is 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 is also 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.
The company 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 its decision to close the Ince factory 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 Bradshaw questioning the ability of CF Fertiliser to make those goods at the firm’s 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 elevated, with ammonia trading at £716 per tonne this month.
There are growing expectations in the industry that high fertiliser prices could be baked into the market for at least two years following Russia’s invasion of Ukraine, with both countries being key producers of essential ingredients.
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.”
The NFU represents nearly 46,000 farming and growing businesses – promoting and protecting the interests of British agriculture and horticulture on behalf of farmers.
Long-term sustainability is crucial, argues CF Fertilisers
CF Fertilisers has suffered a slump in sales over recent with years, with its ammonium nitrate fertiliser sales volumes to domestic customers falling nearly 30 percent since the 2017-18 season.
It has attributed this decline to intense competition from lower-cost imports, which contrast with an expensive domestic market.
A spokesperson for CF Fertilisers told City PM: “Both the Billingham and Ince manufacturing sites are high-cost production facilities in an intensely competitive global market – with foreign producers already supplying more than half of UK fertiliser demand through imports.”
It revealed that when both Billingham and Ince are producing ammonium nitrate even at minimum levels – CF Fertilisers has not been able to profitably sell the entire volume domestically over the last four years.
This has caused the company to increasingly turn to exporting at unsustainably low margins in order to continue operating both facilities.
CF Fertilisers confirmed to City A.M that the Billingham manufacturing facility has enough capacity to meet domestic demand for ammonium nitrate fertiliser, which the business had previously served from both plants.
It also revealed the Billingham plant is more efficient than the Ince manufacturing facility, and has the ability to import ammonia
The company did concede that salt-based and compound fertilisers were only produced at the Ince manufacturing facility, but suggested there are many alternatives in the marketplace to secure these types of products.
CF Fertilisers concluded: “We understand the NFU’s call for transparency and would point to the information we shared last week, which fully sets out the business reasoning behind our proposals. We believe that our proposals to focus our manufacturing operations at Billingham and restructure our business in the manner proposed, would best position CF Fertilisers UK for long-term sustainability.”