Imported urea would be cheaper, say farmers

Press, 13 June 1986, Page 11

Imported urea would be cheaper, say farmers

Urea could be imported and sold to Canterbury farmers for $lOO a tonne less than the current retail price of product from Petrocorp, Ltd, Federated Farmers officials have alleged.

But Petrocorp has “moved to meet the market” by absorbing a $l2 a tonne price rise when the Government fertiliser subsidy ends, by absorbing cost and wage increases in the last year and by offering interest-free payment terms.

Ravensdown Supply Cooperative has been asked by farmers to investigate the possibility of importing urea and the company says it has already studied the market.

It put out an international tender some time ago and found that the actual savings were small when weighed against the assurance of the local supply, according to the Ravensdown marketing manager, Mr Andrew Duncan.

A costing by Ravensdown allowed about $lOO for insurance, shipping lossage, interest, wharfage and cartage and the cooperative estimated it would need about $6O a tonne to organise and execute the business.

At present bagged urea can be bought overseas for about SUSIOO a tonne f.0.b., or about $lBO a tonne in New Zealand currency. Therefore on the face of it, urea can be imported for about $340 to $350 a tonne in store. The Federated Farmers critics of Petrocorp’s price have zeroed in on the $lOO plus a tonne disparity between the estimated imported price and the recommended retail price and the recommended retail price for the Kapunl product. The general manager of the natural gas and gas products division of Petro-

corp, Mr Peter Davenport, said international urea prices were low and static. They had been that way for some time but noone had yet moved to import.

He believed this was because of the costs involved, the inferior physical qualities of the overseas product compared with Petrocorp’s Nrich and the terms his company was offering. His price to distributors had not changed in a year during which the natural gas prices charged by the Crown had increased, the wages round had added perhaps 18 per cent to labour costs and the fertiliser subsidy ended. Petrocorp also had a nationwide price to the nearest rail point and could supply on demand, said Mr Davenport. “So our price to the South Island is very competitive,” he said. Petrocorp would also be interested in quoting for a large shipment into any South Island port.

The company is exporting from New Plymouth and it is mindful of the assurances given to New Zealand farmers that the domestic price would not be any more than world prices, said Mr Davenport.

N-rich was the finest urea in the world, he claimed, and he was supported by Mr Duncan of Ravensdown. It was grannulated and stable whereas most imported urea was either in prills or ungranulated. At a recent meeting of the agriculture executive of North Canterbury Federated Farmers, Mr Bernard Duncan, of Darfield, successfully moved a motion calling on the federation to take up the price of Petrocorp’s urea with the Department of Trade and Industry. A Mid-Canterbury

arable farmer, Mr Keith Johnston, of Willowby, has also called on his agriculture section to investigate the urea price. He has asked an importer to try and obtain a price for imported bagged urea in container loads.

Both men want Ravensdown to push ahead with an importation, for the benefit of all urea users and in time for the major requirement for nitrogen on crops during spring.

The marketing manager of Ravensdown said the company had begun moving urea from Kapuni to its South Island depots so as to have it on demand in the spring. “It is a product which needs to be on hand for

strategic use,” said Mr Andrew Duncan.

Ravensdown was still actively investigating world sources of supply but it felt time was short now before the peak demand.

The company’s last annual report disclosed total sales of nitrogen of 16,700 tonnes in the year ended May 31, 1985.

That was all forms of nitrogen fertiliser, said Mr Duncan, and nationally. He said the tonnage of urea sold by Ravensdown by district was not disclosed.

All urea, domestic and imported, is 46 per cent nitrogen, but the physical qualities can vary considerably, he said.