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Costly potash revives food crisis spectre

Costly potash revives food crisis spectre
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First Published: Wed, Dec 10 2008. 11 24 PM IST
Updated: Wed, Dec 10 2008. 11 24 PM IST
Paris / Sao Paulo: Guests clinked flutes of Taittinger in Vienna’s Hofburg Imperial Palace, toasting Russian fertilizer company OAO Uralkali after eight price increases in 18 months.
“I would like to raise this glass of champagne and propose a toast to the success of the whole fertilizer industry and to the prosperity of all of us,” chief executive Vladislav Baumgertner said at the 19 May Rebirth the Earth party. Later, Joe Cocker sang With a Little Help From My Friends.
Half a world away, in southern Brazil, an almost threefold increase in fertilizer prices since January 2007 may cost Martim Mordaski Klemba his farm. The onions he’ll harvest this month don’t look so good, he said. Last month, he began using chicken dung to nourish his 13ha of soya beans. He gave up on corn. “It needs nutrients I can’t afford,” he said.
Uralkali and rivals such as OAO Silvinit of Solikamsk, Russia, are vowing not to cut their prices on the fertilizer potash, a stance that may help reignite the food crisis that gripped the globe this year.
“Farmers may reduce plantings for 2009 because of the high nutrient costs, the credit crunch and recent declines in the prices of staple foods,” said Remi Haquin, board president of the French national grains office. Staples are down about 50% from record highs.
In eight federal lawsuits since September, six potash producers that do business in the US have been accused of colluding to raise prices and limit supply. Four of the defendants—Potash Corp. of Saskatchewan Inc., Mosaic Co., Agrium Inc., and Uralkali—say the cases have no merit.
Silvinit said it is waiting to see which courts will hear the cases before it comments. Belaruskali said Anatoly Makhlai, deputy director for ideology, wasn’t available to comment.
Earnings for Uralkali, based in Berezniki in central Russia, will climb fourfold this year and 9.3% in 2009, according to Merrill Lynch and Co. estimates. Competitors including Potash Corp. and Israel Chemicals Ltd of Tel Aviv have followed suit on prices.
Price jumps for potash, a source of potassium, outstripped those for nitrogen or phosphate fertilizers this year. In August-November, the average price for potash rose 20% to $765 a tonne, according to World Bank data. Urea, a nitrogen fertilizer, slid 68% to $245.75 a tonne, and diammonium phosphate 48% to $612.50.
Uralkali’s price for a tonne of potash is $1,000 in Brazil, up from $190 in January 2007.
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First Published: Wed, Dec 10 2008. 11 24 PM IST