Wynnstay Group has added its voice to the list of observers reporting a revival in the fertilizer market, crediting lower prices for a return to year-on-year growth in sales.

The farm supplier trumpeted "encouraging signs of recovery" after declining sales volumes in 2008, in line with the global trend.

"Current sales are materially higher than in the same period last year," chief executive Ken Greetham said, raising pricing as the key factor in the market's revival.

High prices had caused last year's "significantly reduced" demand, with a drop in prices behind this year's "stimulated activity", Mr Greetham said.

The comments, albeit from a small fertilizer player, come as North America's cabal of potash producers is attempting to support prices which remain at well over twice historic levels.

Milk price impact 

Wynnstay added that, despite low crop prices, farmers had "taken advantage of superb planting conditions" ahead of the 2010 harvest, prompting it to expect robust demand for all its farm supplies.

Indeed, sales of cereal and herbage seeds jumped by 20% in the year to end of October, helping limit to 13.2%, to £160.7m, the revenue decline at the group's core agriculture supply division.

Beside the fertilizer downturn, the business suffered a 12.5% fall in like-for-like sales of animal feeds, blamed on the downturn in dairy markets.

"The lamb and beef markets were strong and we increased [feed] sales to these sectors," Mr Greetham said, adding that takings from poultry farmers had also proved "good".

Market reaction 

Group revenues fell 8.4% to £215.0m thanks to the lower farm supply takings, with earnings sliding by 2.1% to £3.82m.

Howeve, the outlook for UK farming remained "very positive", Mr Greetham said, with the global issues of food security and population growth "providing underling support".

"We remain confident about prospects to develop the business further," he added.

The group unveiled a final dividend of 2.2p per share, taking the full-year payout to 6.5p, up 8.3% year on year.

Analysts at WH Ireland, the broker, raised their target price for Wynnstay shares to 285p from 270p.

However, the stock closed 3.1% lower at 235.5p in London.