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Ravensdown manages risks and supply disruptions in a volatile world so that farmers can depend on the timely provision of essential nutrients in bulk. Shipping and supply challenges, exacerbated by Covid-19, make the task of a buying co-operative that much more important.   

Enormous demand and severely limited supply options for potash is a recent example.

The few other suppliers from which we sourced potash last year are not viable options this spring. To avoid the very real disruption that any limited availability of this essential nutrient may cause, it was necessary to purchase from Belaruskali (BPC) which has proved a reliable provider in the past.

EU sanctions against the government of Belarus do not cover the kind of potash we are shipping. European countries, America and others continue to import and use that product from BPC as they too are reliant on that potash for food production.

We leave BPC in no doubt that we disagree with the Belarusian political leaders’ current approach to human rights and remind the supplier of our expectations of ethical conduct among business partners.

We continue to closely monitor the situation, minimise the risk of supply disruption and work with the very few alternative suppliers on future procurement. Of course, we will also accommodate any changing guidance coming from MFAT. 

What is potash used for?

Centuries ago potash was created using a pot to boil water that had been passed through wood ashes (hence the name). These days the process of getting hold of potassium (K) in water-soluble and plant-available form is on a totally different scale.

Potassium is involved in photosynthesis, boosting vegetative growth of plants, carbohydrate and nitrogen accumulation, facilitating the synthesis of proteins and sugars required for plant growth. Potassium also regulates the transfer of water and organic substances throughout the plant organs, which is needed to obtain high yields.

Legumes such as clover that improve nitrogen fixation and reduce the need for manufactured nitrogen depend on good availability of potassium, phosphate, sulphur, trace elements (particularly molybdenum and boron) and lime.

Just like humans, animals need this essential nutrient too. K regulates the functioning of nervous and cardiovascular systems, making a positive impact on muscle development, improving digestion and decreasing animal mortality.

Potassium deficits in pasture may not be immediately visible. Plants absorb K in much larger amounts than phosphorus, so annually soils can potentially lose large amounts of K with application rates often not compensating the losses caused by crop removal. The grazing animal recycles between 70 and 90% of the K ingested in dung and urine usually back onto the pastures.

Partial potash replacement is used particularly on sedimentary soils where K reserves can be large. This is because New Zealand’s young sedimentary soils have not yet been heavily weathered. For volcanic and pumice soils, which do not have the mineralogy associated with K reserves, a complete maintenance programme maintaining optimum soil test levels is appropriate.

Where does Ravensdown get its potash?

We have contracts in place that mean our shareholders who depend on bulk provision are not exposed to risk of spot prices or sporadic availability. There are relatively few companies that export potassium and these are based in Canada, Germany, Russia and Belarus. The Belaruskali Potash Company accounts for around 20% of global supply and have proved reliable to New Zealand in the past.

With so few providers in the world outstripped by such demand (eg US bringing in 700,000 tonnes from Belaruskali), securing availability of this strategically essential nutrient is vital. This risk is compounded by the fact that each mine runs a “just in time” operation i.e. it mines and ships to a forecast and sells what it extracts rather than storing in any large warehouses.   For this reason, the Canadian supplier that provided a shipment last year was not an option for the shipment this August.

Why is supply such a problem? 

The timeliness of use in New Zealand is critical as spring tends to be the key time for the majority of use. But it's not like ordering something online for next day delivery. Working back from when you need a shipment of 35,000 tonnes of potash to be ready to use in this country, there is a lag of about 150 days.

It’s challenging to identify new suppliers as their production is fully committed.  Competition for orders at key times is very high – Brazil for example is currently buying up large amount of stocks on the back of strong grain prices.

What is the problem in Belarus?
Escalating tensions in and new EU sanctions on Belarus are centred on the current President Alexander Lukashenko.  Critics point to the detention of opposition leaders and the handling of protests about the August 2020 election.

EU sanctions against the government of Belarus do not cover the kind of potash we are shipping. The EU avoided placing sanctions on MOP with a potassium content evaluated as K2O by weight as exceeding 40%, but not exceeding 62% on the dry anhydrous product. European countries, America and others continue to import and use that product from BPC as they too are reliant on that potash for food production.

While the August order from BPC was out of necessity, future shipments are subject to negotiation. Efforts to explore alternatives will continue but if the Canadian supplier has no availability then the BPC option will need to be considered.

We leave BPC in no doubt that we disagree with the Belarusian political leaders’ current approach to human rights and remind the supplier of our expectations of ethical conduct among business partners.

We do not condone or support the actions of Belarus’s political leaders and the commercial company we deal with is left in no doubt about our expectations of ethical conduct among business partners. The situation is complicated by the fact that much of the Lithuanian economy and workers depend on the potash product flowing from Belaruskali and that sanctions from some EU countries are also in place on Russia which is one of the only other available choices.