As you will know first hand Coronavirus is impacting the majority of New Zealand businesses in some way or another. Now that we have some more information around the impact for our business I will take the opportunity to explain the current situation.
The most positive news is that China seems to be getting back to business as usual, we have seen this firsthand with our suppliers and factories returning to work and with ports getting back into operation, albeit with a backlog to clear. While this means we can now commence with supply out of China, more importantly it means their demand for our agri-commodities will be back on the rise.
What Are the Impacts on Our Ability to Supply?
On the whole we have come through what we hope to be the worst supply impact of Coronavirus in a good position. While we have had some relatively minor shipment delays due to already loaded vessels being held up, the largest delay has been with our Triple Superphosphate product line. With our Chinese supplier closing down for 6 weeks we made an early call to import more product from our Middle Eastern supply. While we are in a much better position than if we waited for China to come back on line we will however still run into a supply shortage later in March, with our Middle Eastern shipments starting to land in early April.
For our clients wanting TSP applications around this time we would recommend to either wait for our TSP shipment to arrive in early April, or consider using DAP and taking advantage of the added Nitrogen to boost feed into winter (see more below).
We understand the importance of timing when it comes to farming and fertiliser and we would like to apologise in advance to any loyal customers that we may not be able to supply over this period. We will endeavour to look after you the best we can.
DAP Vs Triple Superphosphate
Although many areas have started to get some rain the drought for most is still ongoing. With the growing season continuing to be shortened the option of applying DAP and incorporating Nitrogen into your Phosphate application will boost production into the winter months. At Dickie Direct we support this method of both improving and lengthening an already shortened growing season as we approach winter, with this option already proving popular amongst our client base.
DAP is an extremely cost-effective and efficient means of applying both Phosphate and Nitrogen. Using DAP instead of Triple Superphosphate has no impact on tonnage being applied meaning there is no additional change for freight and application costs. Below I have calculated some growth rates and costing’s based on current list prices:
TSP @ 20% P @ $585/tonne
585/200 = $2.925/unit P
DAP @ 20% P, 17% N @ $713/tonne
($713 – (20 x $2.925))/17 = $0.753/Unit N applied
Due to the efficiency and stability of Ammonium N in DAP we are confident you can expect a response between 15-20 (Avg. 17.5) KGDM per 1 unit N.
For the extra $128/tonne spent per tonne on DAP relative to TSP you should expect to grow an additional 2975 KGDM, or for a typical phosphate application of 20 units of P/H you should expect to grow an additional 297.5 KGDM/H. This equates to a cost of 4.31 cents per KGDM. To put this in perspective this works out to approximately 1/3 of the price per KGDM when compared to Urea applications.
Hopefully we have now seen the worst of the Coronavirus impact on supply and demand. Unfortunately, however, it seems we are just starting to see the direct health effects within NZ with more people being diagnosed daily.
The team and I would like to thank you for your patience over this time and wish you all the best for the Autumn.