Domestic Price of Fertiliser

IBISWorld expects the domestic price of fertiliser to decline by 11.5% in 2024-25, to 139.6 index points. Falling global prices for petroleum products, a key input to many fertilisers, is expected to be a key driver of this price decline. After the Russia-Ukraine conflict, prices surged to unprecedented heights. Therefore, the decline over the current year ultimately reflects the heavily inflated prices in previous years. As global supply and demand gradually stabilises, prices are expected to continue declining in New Zealand. However, given the scale of price rises in 2021-22 and 2022-23, the domestic price of fertiliser will remain well above pre-pandemic levels.

As noted above, the most significant driver of price inflation are the supply disruptions stemming from the Russia-Ukraine conflict and related sanctions, which caused prices to skyrocket in 2021-22 and 2022-23. Russia and Ukraine are highly consequential in the global manufacturing value chain of fertiliser and the outbreak of the war caused a major imbalance between supply and demand. A range of factors influence fertiliser prices, including demand conditions, climatic conditions, fluctuations in the cost of inputs used to manufacture fertilisers, changes in the value of the New Zealand dollar and conditions in global markets. Both domestic and global weather conditions can also influence domestic fertiliser prices. In times of low rainfall or drought, agricultural businesses may reduce fertiliser use. Prior to the pandemic, fertiliser prices trending upward as a depreciating New Zealand dollar increased import prices and as strong demand for local dairy products boosted demand. The Russia-Ukraine conflict accelerated these trends and the domestic price of fertiliser reached unprecedented heights. In 2023-24, this trend reversed and prices started to decline. Overall, IBISWorld expects the domestic price of fertiliser to rise at a compound annual rate of 9.2% over the five years through 2024-25.