Seven times the cost of a good fertilizer returns to the grower
03 March, 2024
Agrohellas is activating a strategic partnership with the Greek arm of BASF, with its eyes on the growing market of nutrition products that incorporate new technologies. The “alliance” of the two companies, as revealed by the commercial director of Agrohellas’ agricultural supplies sector, Konstantinos Tzadarmas, brings the innovative fertilizer “40-0-0 Powered by Limus” to the domestic market. Tzadarmas announces a new strong collaboration with a multinational in the field of nutrition, which will concern products with coated fertilizer technology and the creation of a new blended fertilizer unit, with a budget of close to 10 million euros. The company is also preparing to add another branch in Amfilochia, which will serve the clientele in Western Greece and expands on the one hand to the part of seeds, then kiwis and stone fruits and on the other hand to irrigation systems.
Although as a company you have been present on the Greek market for over 30 years, of which about 20 with the Agrohellas brand, agricultural supplies are a business activity that arose later. What was the stimulus for this move?
Our involvement with agricultural commodities actually started in 2012. Since then, as a company, we have cultivated over 2,500 acres, which are now cultivated with rice. Therefore, we needed large amounts of fertilizers. This made us come closer to the agrifood and we decided to be in marketing and distribution as well. While we were working on it, however, we found that we have the potential to expand in production as well, having as a trigger to reduce the cost of lubrication. Thus, it was decided to build a blend unit, for the production of fertilizers, in which we can produce quality products.
When was the unit finally set up?
The packaging plant was put into operation in 2017, however we had already been in the area for several years, as we initially started producing and working with other packaging plants. So we had gained experience and now knew well the secrets of the whole production process. Here, we set up a state-of-the-art unit, in which no human hand rests, and we invested a lot in knowledge, but also in human resources.
What was the amount of investment and what infrastructure do you currently have in the fertilizer production part?
The cost for the construction of the unit exceeded 10 million euros and it covers approximately 30,000 m2, on a property of 70 acres. The equipment for mixing the raw materials is Dutch and enables us to achieve it in an accurate way, based on specific gravity and not by eye or kilo. Because, in order to produce a quality blend fertilizer, in addition to very good raw materials with high phosphorus water solubility, you also need accurate mixing. In packaging, respectively, our modern technological equipment is Italian. And we are currently packing more than 110,000 tons per year, based on 2023 figures.
For this year, what are your estimates?
2024 seems to have entered strongly. I believe that last year’s kilos will be caught in production and that they will exceed the 110,000 tons that we had last year and the year will close with an increase, but this will be more clear within the next two months.
What kind of technologies do you focus on?
The technologies that we currently have in our hands are on the one hand the classic NBPT, which is the only urease inhibitor, and for a few weeks we have also entered into a very important collaboration, a CoBranding, with BASF and we are releasing the innovative product in “46- 0-0” Uria, Powered by Limus. It is the trade name of a double barrier with NBRT, but also NRPT technology.
And how exactly does it work in the field?
When we do the mixing, we basically use uric acid. There are three forms of nitrogen. Uric, ammonia and nitrate. However, the plant assimilates two. ammonia and nitrate. By pouring urea into the soil, it must be converted to ammonia and then to nitrate. However, when urea comes into contact with water, it hydrolyzes and a percentage of it turns into gaseous ammonia and is lost to the environment. By placing the two barriers, we block it and thus a significant part, around 30%, of the nitrogen, which goes to the plant, is not lost.
When was your collaboration with BASF activated and what steps will follow?
Our collaboration was essentially finalized from the end of 2023 and started to be implemented from the beginning of 2024. For now, however, with the cobranded product Powered by Limus we are only in urea. Stabilized urea, however, is also used in other types of fertilizers. So I estimate that within 2024 we will expand to other types as well.
Has the institutional framework for eco-schemes influenced the shift we are seeing in the market?
It has greatly affected demand and consumption, indeed. We now observe with their reinforcement an 80% shift in consumption compared to last year, going to restricted fertilizers. That’s where we would go anyway, because the future belongs to the jammers. It is just that the pace of transition has now been accelerated, although this should have happened much earlier. In my estimation, the subsidy should not be the incentive, but the icing on the cake. Today, the producer is also an entrepreneur and has to calculate where he spends his last euro and what will be returned to him as an investment.
Farmers have become aware of what you describe, because we often hear them complain about the high cost of fertilizing…
Many times the producer really focuses on how much the bag of fertilizer costs. I think this is a wrong approach, because the account is made when we reap. Don’t look if the bag is 2-3 euros more expensive compared to a simple fertilizer. Let’s see at the end what is the benefit of this choice.
That is, value for money?
Value for money exactly. And recently we made an account with last year’s data, a producer applying a Limus technology product has a benefit per acre from 25 to 45 euros. What is the reason? First, 20% to 30% higher production has been observed. So, when someone puts 40 kg per hectare in the surface fertilization of the grains simple urea, he gets 450 kg of production, while with the Limus technology the yield – because we evaluated it in our own fields as well – is on average 540 kg of durum wheat per hectare. You see that these extra 90 kilos, with 345 euros per ton paid to the producer last year, deducting the cost of Limus, gives us a financial difference of 25-28 euros per hectare. Which means that a farmer with 400 acres, just from the application of Limus, would have won 10,000 euros. So, even if the subsidy did not exist, he should have chosen it on his own initiative and used it. Of course, to get to this point, it takes a lot of work, even from us companies, to pass this knowledge on to the producer. Because the farmer, you know very well, has the mentality “to be convinced, I must see first”.
Are they willing to try it though?
This is the second year we have implemented Limus and the growth is spectacular. There is no farmer who bought our product to try it and this year did not get it for 100% of his needs. Greek farmers should become profitable. And my proposal is clear. In order to be profitable, one must have in one’s hands technology and innovative products that will make a difference.
How is the market picture shaping up in the fertilizer segment that incorporates new technologies, as we have seen competition increase a lot as well?
Because we are coming from a very volatile two years, with high prices and together with the floods and natural disasters we had in Thessaly, the market is coming from a state of panic. The only thing certain is that the increase, especially in nitrogen, during this period is a given. Because, for better or for worse, nitrogen pays the producer. Here I would like to emphasize again that the discount on fertilizer leads us mathematically to disaster in the end. Because you get the fertilizer money back 4 to 6 or 7 times. It is an investment and it is better to get a smaller machine or to get it later than to cut off the nutrition of the crop.
However, there are not a few cases with producers, who for various reasons choose to fertilize their fields…
In cereals, yes, reductions in basic fertilization were observed, we had malnourished plants at the beginning. However, I see that this is about to change. Clearly, producers monitor grain prices on a daily basis. I would like to remind them, however, that we cannot intervene in product prices, what we can do is influence performance and costs. And as Agrohellas, we are here to provide such solutions.
What does the company’s agricultural supplies activity include?
At Agrohellas, at the moment we have collaborations with almost all multinationals on agricultural supplies and I’m talking about seeds, crystalline and liquid fertilizers, but also plant protection formulations. We also have our own line, Agro, with private label products, as well as products with amino acids and trace elements, while in the future other collaborations with innovative and more environmentally friendly products will appear.
Since you’ve piqued my curiosity, what kind of collaborations will these be and how far along are they to finalize?
In the middle of 2024 we will have announcements. We have already started some contacts and they concern the part of nutrition. In the next two to three months we will have news. They are contacts with a multinational company and we are talking about a technology, which will be related to the covered fertilizers. And as far as I know there is nothing similar in Greece.
A clarification. How will this collaboration work?
As fertilizer producers we will use the coated fertilizer as a raw material, which will then go into our products and our own lines will come out. We are heading towards a cobranding in this case as well, but we will soon see how it will turn out.
Have you already tested the specific products in the soil and climate conditions in Greece?
Last year was the first year of tests and the results from their application are very good. They mainly concern basic lubrication. And these are aimed at reducing production costs and at the same time increasing productivity, so as to bring an additional income to the producers.
Will they be oriented towards large crops?
It will cover the entire gamut. From large crops, to horticulture, but also arboreal and greenhouse crops.
Through what channels are all these products that you produce and market available?
We have our own stores and cover our customers with a network of sellers, going directly to the producer and supporting him through the field, covering all of Greece. We are more than 25 agronomists of which 17 are out in the field. There is the technical department that can provide solutions and support producers in technical issues.
How extensive is your network of stores and are there any thoughts to expand it?
We have five privately owned branches and this year we are going for the sixth. The existing ones are in Orestiada, Alexandroupolis, Thessaloniki, Giannitsa and Larissa and within 2024 we will also have a branch in Amfilochia, on privately owned premises, which will serve our customers in Western Greece. In Giannitsa, by the way, I should add that we also have a certified nursery with kiwis, through which from this year we are also strongly involved in the development of plants for stone fruits, a crop that flourishes in the area.
Regarding your production unit, there are plans to expand it.
It is clearly in our immediate plans. Their implementation will unfold in 2024. We are erecting, here on the existing property, to which we have added another 30 acres, another state-of-the-art plant for the production of blend fertilizers, and in 12 months from today it will be operational.
What amount of investment will it be and how will its implementation be covered in the financial part?
Equity is usually used in such investments, but all other available financial tools such as programs are also used. As for its amount, it is expected to approach 10 million euros.
In terms of production capacity, where will it range?
It will have two packaging lines, one in big bag and one in sack, while its capacity will exceed 150 tons per hour, when, to understand the difference, the current unit produces about 40-50 tons per hour.
We are talking about a unit with very high potential. So basically we are talking about tripling your productivity…
It is a necessary move to be able to satisfy the needs arising from the growing demand in Greece and abroad.
Have you developed an export activity with fertilizers?
In recent years we have made an opening in Balkan countries, Cyprus and generally abroad. And what makes the difference, I say again, is the quality of our products.
As far as the rest of the agribusiness is concerned, what is the picture?
At Agrohellas the first violin is nutrition. However, we also have products of other categories from all multinationals. We cover needs in herbicides, fungicides, plant regulators and other preparations. Another of our activities is rice cultivation in Evros where we also have a privately owned rice mill. We are an exporting force in rice and we continue to cultivate them in an area that reaches 2,500 acres of rice and step by step, we grow it, as the area is suitable, due to the presence of the river Evros
One last question, as an economic entity, what does Agrohellas represent?
Agrohellas currently has a turnover of more than 120 million euros and of this around 50% comes from the agro-supply division and the remaining 50% from the feed arm, which is also a very dynamic and growing part of the business. us. In terms of its workforce, the company employs over 200 workers in Evros and Thessaloniki and through our branches.
