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Fertoz expects growth of organic fertiliser markets to rebound in September quarter

As the fall planting and fertilising season approaches, the company has already reported that border delays in the North West of America are no longer impacting business.

Fertoz Ltd - Fertoz expects growth of organic fertiliser markets to rebound in the September quarter
Fertoz remains under budget year to date however the second half has started positively

Fertoz Ltd (ASX:FTZ) is confident in the growth of key markets for its organic fertilisers as businesses learn to live with the rolling lockdowns of the COVID-19 pandemic.

Despite a rocky first half, the company began regular shipments from the company’s Mexican stockpile where a local partner mines and crushes the ore, and Fertoz takes ownership of sales at the US border.

The new US-Canada-Mexico trade agreement that began on July 1 is expected to generate steady sales in the rest of 2020 – compensating in part for falling conventional fertiliser prices and slow deliveries caused by border closures and COVID-19 outbreaks in North America which negatively impacted sales in the first six months of 2020.

Retail sales growth

Subsequent to the half-year, the company has responded to numerous website hits with the development of products suitable for online retail sales (4-pound, 10-pound, 25-pound and 50-pound bags) and engaged with a partner that can package, label and manage fulfilment for on-line orders.

COVID-19 has led to increased organic food sales in the company’s geographical markets and the board expects this to translate into additional sales in the coming months.

Increase in enquiries

The company notes that some new competitors are attempting to enter the market based on the increased demand for organic foods, but the entry barriers to organic fertiliser markets are high, with farmers requiring multiple laboratory and multi-year field trials prior to swapping from their existing suppliers.

Fertoz has the requisite results of multi-year trials, showing increased yields across a range of crops, soil types, weather patterns and geographies.

An increasing trend in Environmental, Social and Governance (ESG) requirements for major companies has also resulted in an increase in enquiries and discussions with Fertoz management, as large, publicly traded companies seek to lower their impact on the environment and secure socially and corporately acceptable partnerships.

September quarter expectations

In the approaching fall planting and fertilising season, the company has already reported that border delays in the US North West are no longer impacting business.

Orders are also picking up from a large processor of organic fertilisers which encountered construction and commissioning problems at their USA plant and subsequently delayed orders.

Fertoz states that COVID-19 has driven increasing demand for organic produce and this is trickling down to farm input suppliers like the company, evidenced by early sales picking up in the September quarter.

Notably, while COVID and border issues also impacted sales in Australia and the various countries and Islands that purchase the Australian fused magnesium fertilisers, like North America, quarter three sales are beginning to rise again as people and businesses learn to live with rolling lockdowns.

Quick facts: Fertoz Ltd

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ASX:FTZ
Market: ASX
Market Cap: $11.18 m
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