JAMAICAN farmers can look forward to cheaper fertiliser by 2014 after construction of a new plant introduces competition to the market.
Local investors, some of them farmers, plan to raise up to US$5 million ($450 million), possibly through an IPO (initial public offering) on the junior market of the Jamaica Stock Exchange, to fund the mixing plant.
“They're exploring financial options,” said Mark Crosskerry, CEO of Stocks and Securities Limited (SSL), adding that any flotation would probably be in the first quarter of 2013.
Among other details, the investors are debating whether to call the company FCA Jamaica or FCA Caribbean, he said.
Project adviser David Christopherson, the owner and president of Fertilizer Corporation of America in Florida and Eastern Fertilizer Corporation in Barbados, said the new plant would do more than make money.
“The investors are not doing this out of greed, but as a contribution to Jamaican society,” Christopherson said. “They think the farmers are paying too much, and they want to bring the cost down. To me, it's gratifying to work with people like that.”
Newport Fersan Jamaica, a local company majority owned by the Viyella family from Dominican Republic, currently sells 80 per cent of the fertiliser used on the island.
“We welcome competition as long as we play by the same rules,” said its managing director, Dennis Valdez.
The company had 90 per cent of the market until last year when Pan Caribbean Sugar started importing fertiliser and distributing it to farmers who supply it with cane.
Hanqi He, the CEO of Pan Caribbean, said he had been buying from Christopherson's company and was pleased with the quality and service and expected the same from the new FCA.
“We are looking forward to the set up of their business so that we can enjoy the benefits of free competition between fertiliser suppliers,” he said.
Newport Fersan believes that its customised service will give it an advantage in a competitive market. The company tests soil samples provided by farmers and tailors its fertiliser to fit both the crop and the field.
“We just don't sell a bag of fertiliser,” Valdez said. “We are capable of selling exactly what you need and what the crop requires.”
However, Christopherson said FCA would use more scientifically advanced formulae.
The new plant, tentatively to be built on four to five acres west of Kingston, will have a capacity of 40,000 tonnes a year, based on a single shift working a five-day week. It would employ 20 to 25 persons.
Construction should begin in the new year and is likely to be complete in seven to 12 months, he said.
The plant will mix imported potash from Saskatchewan, Canada; ammoniated phosphate and ammonium sulphate from the US; and urea from Trinidad, together with minor elements such as zinc, manganese, magnesium, copper, iron and boron.
“It's almost like mixing a cake,” he said.
Depending on what goes into the mix, the fertiliser could cost anywhere from US$450 to US$900 per tonne.
Christopherson tried to set up a plant in Jamaica with Norsk Hydro and three other corporate partners more than a decade ago but the deal fell through at the last minute when one local player announced it was short of cash.