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Fertiliser contract concerns

18 Mar, 2010 06:22 AM
WAFARMERS is taking legal advice to assess concerns raised by members over fertiliser contracts recently.

WAFarmers president Mike Norton said his farm lobby group had received an escalating number of phone calls in recent weeks, from disgruntled farmers who thought they had fixed price contracts "or what appeared to be fixed contracts", but discovered the purchase price had escalated, at the time of product collection.

Mr Norton said the contracts and details had been sent through to Kott Gunning Lawyers for assessment and they were now investigating the claims further.

Mr Norton said even if the claims proved correct, growers may have to "take it this year", and pay up to $50 per tonne more than prices set two to three months ago, in their "fixed contracts".

But he warned if that happened, farmers had "elephant memories" and would not forget the company they were dealing with.

Mr Norton warned forcing farmers to pay the higher price could be a short-term gain for a long-term loss.

"Next year farmers will be more mindful about the companies they deal with," he said.

"By looking at these contracts, it would appear some people have been duped a bit."

Mr Norton said the calls of concern had increased over the past two to three weeks, with farmers now in the process of collecting their fertiliser orders, or purchasing it after doing their budgets.

"There has been some significant amounts of money lost, which makes it tough, especially in this current climate," he said.

"It's a tough market out there for fertilisers and I'd say some companies are taking advantage of that."

Mr Norton declined to name the company or companies that the "fixed contracts" were linked to.

He said the Ravensdown Fertiliser Co-operative, which the farm lobby group had a commercial arrangement with in 2009, was not in the firing line.

"I'm sure the rumour mill will get around and people will know who it is," he said.

"Fertiliser companies lost a lot of money last year; it's all about trying to recoup those losses."

Whitfert CEO Phill Whitford, said he was aware of the situation, but stressed his company was not under the microscope and stood by its fixed contracts.

Mr Whitford said his company had not reneged on

a single contract with growers, or a single dollar, this year, or in the past 10 years.

"If a contract is a fixed price we state that in the contract and when the fertiliser is to be collected, but the grower also needs to pay and collect it when they say they will; a contract is a two-way thing," he said.

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There is two sides to each story, and the other side of this story is what happened at the end of 2009. MANY farmers committed to large volumes of fertiliser last year, then when the prices started dropping - reneged on picking up product, stating that they were "waiting to see how far the price will go down..." Many of the fertiliser companies were hit with large losses because of this (as were a number of chemical companies in the case of say glyphosate)... A volume of product was committed to (and purchased) at the higher price by the fertiliser companies - and they then had to wear the losses when farmers reneged on the volumes they had committed to. Despite the conspiracy theories - these fluctuations in price WERE driven globally... Australia is an insignificant player as far as the total world agricultural market is concerned. As Mr Whitford says - contracts are a two-way arrangement, however I believe many farmers did not hold up their end of the bargain last year. For the record: no, I do not work for a fertiliser company... but I certainly watched this scenario with interest.
Posted by Interested onlooker, 19/03/2010 9:44:54 AM, on Farm Weekly

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