What is Fertilizer Trade Finance?
Global demand for fertilizers and agro-chemicals remains healthy and growing, as populations rise, chemical prices remain stable and agri-businesses continue to seek to maximise yields from their holdings. Using a combination of capital, tools and international trade expertise, Trade Finance Global has helped a number of firms trading in these products import the materials they require and export their product to new markets abroad.
Fertilizer Trade Finance
The UN’s Food and Agriculture Committee estimates that global demand for the three main fertilizer nutrients (nitrogen, phosphorus expressed as phosphate, and potassium expressed as potash) will grow annually on average by approximately 2 percent respectively from 2015 to 2020. Global capacity for production of fertilizers, intermediates and raw materials is also expected to increase over that timeframe. The market for fertilizer is also shifting. As agri-producers increasingly to produce and export crops labelled with organic product codes to take advantage of rising prices in the sector, demand is rising for appropriate bio-fertilizers which can replace traditional chemical products.
Conducting international transactions with global suppliers has been a major source of revenue growth for fertilizer producers in developed and developing countries. Although international trade ventures can be inherently risky, and the lengthy trade cycles caused by transportation of the products can cause cashflow issues for firms with full order books, all these issues can be mitigated if the firms involved fully explore their options for trade finance. Partnered with financiers equipped with the finance and tools to support these ventures, fertilizer traders are extremely well placed to capitalise on growing global demand for their products to grow their revenues and profits.
Key fertiliser products financed include:
- Animal fertilisers
- Vegetable fertilisers
- Chemical fertilisers
- Mineral fertilisers
- Other agrochemicals
- You can demonstrate a history of profitable trading
- Your business is creditworthy
- You have a well-researched business plan in support of your proposed venture
Unlike conventional finance, trade finance products require limited capital guarantees up front from the firms involved. Instead, Trade Finance Global will work with you to assess your business and your proposed venture and recommend an appropriate trade finance product for you. They will then identify sources of private finance and construct a product for you with bespoke lending terms and some form of guarantee for the lender – usually, this will take the form of an unpaid invoice, cash due in accounts receivable, or even the fertilizer goods involved in the transaction. Once agreed, TFG can extend finance to the buyer in the transaction to pay the seller in full upon dispatch of the goods, cash flow the buyer can enjoy lengthy repayment terms to ensure they can transport, receive and sell the goods involved in their venture, before repaying the finance from the profits.
What is the SIC Code for Trade in Fertilizer?
The mining of chemical and fertilizer materials is covered by a single SIC code – 08910.
Several other codes exist for businesses involved in the manufacture and sale of fertilizers and other agrochemical products:
20150 | Manufacture of fertilizers and nitrogen compounds |
20200 | Manufacture of pesticides and other agrochemical products |
46120 | Agents involved in the sale of fuels, ores, metals and industrial chemicals |
46750 | Wholesale of chemical products |
47760 | Retail sale of flowers, plants, seeds, fertilizers, pet animals and pet food in specialised stores |
Full tariff schedules for fertilizers and agrochemicals can be found on gov.uk.
Case Study
A domestic wholesaler selling to UK agri-businesses wanted to expand into new EU markets. TFG was able to provide trade finance to enable them to import large volumes of chemicals to service this new demand.
Speak to our trade finance team
Benefits
- Service new customers to expand your business
- Finance growth in your business without risking capital or sacrificing equity
- Mitigate risk around international transactions