Farm Input Prices: Fertiliser supplies may run short, prices likely to rise
January 18th, 2010
Agricultural lender Rabobank is warning the sudden drop in farm spending on inputs such as fertiliser may leave the industry short of supply for a time this year, as production ramps back up to meet the bounce-back in demand now occurring as agricultural commodity prices recover. Rabobank analyst Adam Tomlinson says farm input prices have stabilised at similar levels to 2006/7.
Rabobank expects most farm input prices will remain above pre-2006 average levels in the short to medium term. Higher dairy prices in 2010 will push farm input demand above 2009 levels, albeit still well below the historic high levels of the mid-2000s. Short term price impacts will mainly be caused by factors such as changing energy costs, reflecting energy-intensive manufacturing processes and the use of hydrocarbons to produce products such as nitrogen fertilisers.
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