More expensive fertilizers within a decade

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The lack of common EU policy on energy results in Russia treating particular countries in various manner during trade negotiations concerning the pricing of natural gas. Consequently, the cost of manufacturing nitrogen-based fertilizers is rising at a different pace in various countries.

Considerable consumption of fertilizers in Poland

Since Poland joined the European Union, the use of fertilizers by Polish farmers has grown by 31%. At present the total amount is nearly 2 million tonnes per year. In 2012/13 season, almost 1.2 million tonnes of nitrogen-based products were purchased, which is 10% more than in the previous period.

Price growth

The consumption of nitrogen-based fertilizers has increased, but in 2003-2013 the priced of those products rose as well. For example, the price of urea is has grown by 114%, while of ammonium sulphate by 173%. The reason is the growing cost of production of nitrogen-based fertilizers, as this process is based on natural gas. In Poland the cost of manufacturing may not be reduced as there is little possibility of diversifying the supply of natural gas.

Perspectives

This trend could be reversed if we sought alternative natural gas suppliers. To this end, Grupa Azoty “PUŁAWY” is cooperating with RWE Polska, Statoil Asa Norwegia, PGNiG and Gaz-System. Thanks to the consolidation process, the whole Grupa Azoty may count on diversification of 30-40% (depending on the company) of the natural gas required. Moreover, we are hopeful that the Liquified Natural Gas Terminal in Świnoujście and the excavation of domestic shale gas resources may bring new opportunities of diversification.