As the new year begins, fertilizer manufacturers worldwide face higher
raw material costs, limited availability of certain product components
and elevated freight charges. The increased costs have prompted many
manufacturers, including LESCO, to adjust pricing on fertilizer and combination
products.
Although new LESCO pricing will not go into effect until January 1, 2005,
the increase was announced in advance to give customers time to plan
accordingly for 2005. Fertilizer prices went up 8 to 12 percent and combination
products rose 3 to 7 percent.
The
price increase is a direct result of escalating costs for all three
major fertilizer components – urea, phosphorous and potassium.
According to LESCO’s Fertilizer Merchant, Jay Winter, the
price of urea has doubled over the past two years and recently
jumped $85
per ton.
“
The cost of urea alone reflects a 45 percent increase,” he said. “In
addition, phosphorous has gone up $20 per ton and potassium $40
per ton. Potassium surprised us a little, but we have learned reserves
are currently
very low because more product is going overseas. Freight prices
are
also climbing and impacting our costs.”
The price increase for fertilizer/pesticide combination products is not
as significant because herbicide, insecticide and fungicide costs have
not gone up as dramatically as the fertilizer components. This brings
down the actual dollar increase as a percent of the overall cost.
Reflecting
on the new 2005 pricing, Winter emphasized, “Our
intent was to inform our customers early-on and give them
the opportunity to plan accordingly. Just as it is important for
us to know our
costs, we
understand how important it is for our customers to know
theirs so they can establish realistic budgets and make necessary
adjustments to lawn
service pricing. We are committed to working with our customers
to
develop fertilizer programs that will minimize the impact
of
the increased
cost
of fertilizer.”
The fertilizer industry and the professionals it serves have little choice
but to confront the consequences brought on by increased costs. As an
industry leader, LESCO understands the challenges, but remains committed
to meeting the needs of its customers with competitively priced products
backed by outstanding service.
|