COVID-19 pandemic skips fertilizer industry

Farmers’ demands for nutrients stayed on track during 2020.  | File photo

COVID or no COVID, Mother Earth’s population needs food. Up to half the food we eat wouldn’t be available without fertilizers, explaining why the fertilizer sector wasn’t hard hit.

The vital fertilizer industry avoided major COVID-19 disruption because farmers continue to buy commercial nutrients for their crops. Demand overall remained strong and suppliers for the most part were able to meet that demand.

In some areas on the Prairies, fall 2019 weather was more of a factor than COVID-19. Crappy weather in many regions kept combines running until snow arrived, thus preventing the typical volume of anhydrous ammonia from being applied.

Come spring, many of those same combines were back in the field, as farmers tried to salvage some crop before seeding.

Also, these two delays, along with washed out culverts and roads kept the heavy fertilizer trucks sitting idle in the dealer yards.

One of those dealers who watched his delivery trucks sit is Ray Redfern of Redfern Farm Services in southwest Manitoba.

In a phone interview, Redfern says COVID has had minimal impact on fertilizer availability and pricing. He says if the weather had been close to normal, his dealerships would have moved the normal volume of crop nutrients. But COVID-19 did throw a wrench into operations.

“We can cope with COVID. But keeping our staff alive and happy is another matter completely. COVID has caused a great deal of indirect stress internally than externally. Yes, there were some challenges working under COVID guidelines,” said Redfern.

“The spring application window is always tight. But then when a dealer tries to use that tight window to pack in all the product that didn’t get applied last fall, well that itself creates a lot of tension. Put the COVID guidelines on top of that and it can be pretty tense.”

Redfern says last fall his dealerships were only able to apply about 18 percent of the normal volume of anhydrous ammonia.

Suppliers provided enough product, but getting it to the field was the problem.

“We had trouble keeping the operators we already had on staff. It seemed to be tougher keeping ammonia drivers. We had a high percentage of people who did not want to work around the public. They didn’t want the risk. Especially with a family or older parents living with them.

“Every once in a while we had a COVID scare, but never serious enough to force us to close our doors. We had some people who had to self-isolate for 14 days because of a possible contact, but nobody has tested positive so far.

“We had a half dozen staff who just up and quit. They decided life was too short to take the risk, so they left. That of course is their personal choice. One fellow thought about coming back, so he came and looked at how we were doing things. His mother lived with them, so he decided he just couldn’t risk bringing the virus home.”

Redfern says it hasn’t been easy finding replacement drivers. He needs people who are technically competent, but also who are orientated toward the logistics and culture of working in a rural market.

Redfern Farm Supply had conference calls and meetings nearly every week to keep the 120 staff members up to date on what the company was doing to deal with the pandemic. He set up protocols so customers didn’t have to enter the building and so employees could work as far away from each other as possible.

“It certainly hasn’t been easy. It’s especially difficult if we’re working on a leg or working on a repair of some sort. How do you show your technicians to figure out how to wear the mask, stay six feet away from each other and still work together on the project? We’ve all had difficulties with learning to walk the talk.”

With only a few glitches, fertilizer producers around the globe stepped up to meet the demand for commercial nutrients.

The Independent Commodity Intelligence Services is the global source of information connecting data, markets and customers to create a comprehensive view of commodity markets.

ICIS recently released an Insight report on the global situation, produced by Julia Meehan, managing editor of the agency’s magazine.

Meehan says the domino effect of the coronavirus has so far had minor impact on the fertilizer industry. Companies have benefited from cheap feed and cheap energy costs. Even marginal producers have continued to operate.

However, the full effects of the global pandemic are starting to show in some sectors, due to cashflow problems caused by decomposing fruit and vegetable crops that couldn’t be harvested.

China is the largest fertilizer consumer in the world, consuming close to 50 million tonnes per year. It is also a key exporter of urea. Producers there are getting back to normal and production rates have increased for all fertilizers.

When the China lockdown began, the impact was huge in terms of production cuts owing to a shortage of labour. Problems with rail, road and sea also had a big impact, resulting in stock piling up.

The biggest impact for China was on phosphoric acid used to produce phosphate.

China turned from being the largest exporter of diammonium phosphate to a net importer. Urea was less affected.

As the pandemic spread around the globe, many countries started to feel the impact when fertilizer application was at a seasonal high, particularly in the Northern Hemisphere.

As the virus took hold, agricultural and industrial sectors learned from China and many were given government support. The transportation of fertilizers across European boarders continued but with strict measures in place to protect truck drivers and the workforce.

France, the largest fertilizer user in Europe, moved through spring with no impact on supply or demand, although some cracks are starting to appear. Cash-flow problems are emerging for some farmers.

Germany too has seen crops rotting, largely because of the coronavirus. Cafes, bars and restaurants consume large quantities of french fries and are now closed, so demand for potatoes has been cut by 60 percent.

The pandemic continues to rage across Latin America just as their fertilizer season gets into full swing. Demand has been healthy for Latin America, with large volumes of fertilizer moving to Brazil and Argentina.

There has been some concern about new capacities due to come on-stream, creating oversupply. Some of these projects are likely to be pushed back to 2021 because the health and safety of workers is paramount.

Discussions on the impact of IMO 2020 emission standards and Brexit on the fertilizer market have been virtually wiped out by the pandemic. The potential for a sharp rise in bunker fuel prices has not transpired because of the dramatic drop in fuel oil costs.

For many producers, co-operatives, wholesalers and farmers it has been business as usual during COVID-19.

However, the outlook remains uncertain, especially surrounding what the second wave might mean to already broken economies.

Currency fluctuations, political unrest and high levels of unemployment in developed and developing nations will inevitably have an impact in the months and years ahead.

Regardless of all of these factors, the world still needs feeding. This is an industry that will remain robust and continue to be deemed essential.

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