Will fertiliser scarcity harm the farm economy?

About 45 kilometres out of Napier on the way to Taupo you'll get to a place called Te Pohue, solid sheep and beef farming territory. The land's not suited to other more intensive uses, so sheep and beef it is. Te Pohue is where Bruce Wills farms and he, like others in the district, has drastically reduced his sheep flock reports The Dom Post. With fewer numbers, Wills can achieve a heavier ewe and command a better price at market.Beef, says Wills, who is a  Federated Farmers' meat spokesman, is a little easier on the land and back pocket in terms of irrigation and other costs,  a particular concern after many lean years. Water is always an issue on the East Coast, but three years of drought has made it particularly acute. All the more need, then, for fertiliser. All farms need fertiliser, but hilly, water-starved country like Te Pohue, which struggles to achieve the output of the lush lowland paddocks of Southland, Waikato and Taranaki, needs the stuff more than most.Wills won't fertilise his fields this year. At $392 a tonne for superphosphate, it's unaffordable. To put that in perspective, in April last year it was $261 a tonne. For Wills, it's uneconomic to fertilise until superphosphate drops below $300. He freely acknowledges he's running a risk. If Wills skips fertilisation for longer than one or two years, he risks significant damage to his fields, the engine room of his farm. Most other farmers around the country, according to agricultural analysts, are making similarly hard decisions. Driving the price rises is resource scarcity, global demand for food and growing thirst for alternative energy sources. Increased production demands greater fertiliser use. Before the financial crisis, buying a tonne of fertiliser ingredient diammonium phosphate (DAP) would set you back more than an ounce of gold. DAP, which peaked at more than US$1200, and urea prices have since fallen but this has yet to feed through into the cost of market fertiliser. Manufacturers have scaled back production, stabilising prices, but potash is still at elevated levels, according to the Rabobank Agribusiness Review. Wills may get his wish of superphosphate for less than $300 a tonne next year, but that price is unlikely to stay low in the medium to long term. Demand, strangled by high prices and financial distress, may be manageable but scarcity isn't.