Thursday, August 18, 2022

Fertiliser boss concerned over local covid impact

Ravensdown chief executive Garry Diack says his greatest concern is the increased global demand for fertiliser arising due to the loss of Ukrainian crops this year.

Ravensdown chief executive Garry Diack says his greatest concern is the increased global demand for fertiliser arising due to the loss of Ukrainian crops this year.

A veteran of multiple business reformations, Garry Diack is no stranger to grappling with challenges major global shifts and upheaval can inflict upon businesses.

He was part of the strategy team that oversaw the progressive folding in of the provincial dairy co-ops to today’s model.

For him that included the merger with Southland Dairy co-op and ultimately being a corporate midwife for the birth of Fonterra.

After the sometimes bloody business of dairy corporate politics, he took on the equally confrontational media world, pivoting Rupert Murdoch’s NewsCorp to adjust to an emerging digital challenge.

A stint managing Solid Energy over its receivership period came before taking over as Tait Communications CEO.

With the key fertiliser elements of phosphate, nitrogen and even potassium all under pressure globally, exacerbated in recent weeks by the Ukrainian conflict, Diack remains optimistic suppliers will not be short of product this autumn.

Outwardly the global fertiliser sector could appear perilous.

Russia, one of the world’s largest nitrogen producers, is pre-occupied in an intense war, while also putting an export ban on its nitrogen fertilisers.

In the meantime, China, the world’s second-largest phosphate producer has also slapped a ban on exports until June and has wound back production.

Fertiliser news sites have also been running scared about potassium supplies, due to EU sanctions on giant producer Belarus.

“Supply is not really the major issue for us, or for the industry. Since starting here, I have been very impressed at the breadth of long-term relationships going back years between suppliers and us. They tend to love doing business with New Zealand,” Diack said.

The company has multiple sources for all key nutrient types, recently moving out of Belarus supplied potash to Canada after becoming uncomfortable with the relationship.

After almost constant headlines about shipping costs and reliability, Ravensdown has also been able to literally sail around the challenge, thanks in part to ownership of Ravensdown Shipping Services, based out of Melbourne.

Operating for over a decade, the low-profile business unit has leveraged off the company’s 1-1.5 million tonnes of annual fertiliser imports.

A handful of chartered bulk freighters backhaul loads with logs, managing to capitalise on the shipping rates that have proven a headache for many in and out of NZ.

For Diack, the bigger concerns about supply lie closer to home as Omicron works its way down the country, corroding supply networks with staff illness and absenteeism.

“It is starting to get into the likes of trucking operators. Our message is telling farmers that if they have not got your fertiliser on yet, then you would want to do so,” he said.

Globally the dark clouds may become more intense as the year wears on, bought on more by a demand-pull impact, than a supply shortage of fertiliser.

“When you have Ukraine, which has the ability to feed 600 million people, it is looking less likely their farmers will get their grain crops sown this season. All that food has to be replaced and other countries will have to develop their own land to do so. There will be big competition on for nutrients,” he said.

“The concern is on the price tensions that come out of that.”

Pressure on Europe to use other gas sources other than Russia’s is also likely to bring some price pressure with it.

The issue of phosphate sourcing out of Morocco has proven to be a regular PR challenge for the sector, with claims of so-called “blood phosphate” coming out of the conflicted Western Sahara challenging both big fertiliser co-ops.

“We have conducted due diligence on OCP (phosphate supplier) through a third party human rights association. In some areas their approach to human rights possibly outstrips NZ’s ability.” 

OCP is the largest private employer in Western Sahara, with 2200 staff and 50 local companies also directly supported.

Here at home, he acknowledges another controversial topic, nutrient limits and impacts, but is confident farmers have the inherent skills to adapt and manage the challenges.

That includes greater adoption of tech to track and trace nutrient loads, including Ravensdown’s Hawkeye software that can give at a glance indications on nutrient levels by paddock and by catchment.

As farmers readjust fertiliser levels, Diack is also kicking around options for commercialising the company’s latest eco-friendly innovations.

Developed in conjunction with Lincoln University, the ClearTech system recycles dairy effluent water, while the EcoPond system removes methane from effluent ponds.

“In the longer-term there is no question fertiliser volumes are going to go down in NZ. But with appropriate use of the right tech, we can still see productivity lifts, gas emissions drop and the economics of farming remain,” he said.

“The knowledge base within the farm gate on what it takes to run a sustainable farm is massive, and embedded in the mindset of our farmers.”

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