Domestic price of fertiliser

IBISWorld expects the domestic price of fertiliser to rise by 4.2% in 2025-26, to 132.7 index points. The modest rise in 2025-26 reflects stabilisation in global fertiliser supply after earlier shortages, alongside resilient demand from the dairy sector. Over the five years through 2025-26, the index is projected to increase at an annualised 8.5%, reflecting extreme volatility in global commodity markets and shifting local demand conditions. Despite strong overall growth, prices have entered a correction phase since peaking in 2022-23.

Fertiliser prices surged by 43.7% in 2021-22 and an additional 43.1% in 2022-23, reaching a high of 183.0 index points. These spikes were driven primarily by soaring international energy costs, particularly natural gas, which is a critical input for nitrogen-based fertilisers. The Russia-Ukraine conflict constrained the supply of potash and urea, while sanctions disrupted global distribution channels. At the same time, New Zealand's recovering agricultural exports following COVID-19 supported domestic fertiliser demand, reinforcing upwards pressure on prices.

However, fertiliser prices have since fallen sharply. Prices dropped 23.7% in 2023-24 and an additional 8.7% in 2024-25 as global fertiliser production adjusted to earlier shortages and energy markets stabilised. The easing of shipping bottlenecks and the diversification of global supply sources helped relieve cost pressures, but the depreciation of the New Zealand dollar against the US dollar limited the extent of domestic price relief, since most fertiliser imports are priced in US currency.

Fertiliser use in New Zealand is still heavily influenced by dairy farming, with nitrogen-based fertilisers continuing to account for a rising share of applications. Elevated milk prices have supported underlying demand for fertiliser despite cost concerns among farmers. Adoption of more efficient fertiliser practices and tightening environmental regulations, like nitrogen caps under the National Policy Statement for Freshwater Management and ongoing He Waka Eke Noa policy discussions, have moderated fertiliser volume growth compared with earlier periods.

Overall, the domestic fertiliser price index remains well above pre-pandemic levels, but the extraordinary volatility experienced between 2021 and 2023 has eased. Conditions in global energy and fertiliser markets, coupled with exchange rate fluctuations, have been the defining influences on domestic pricing over the past five years.