Rise in Cost of Fertilizer May Influence 2022 Farming
Over the past year, farmers have watched fertilizer prices climb with little to no hope for a price break on the horizon. Urea fertilizer cost Matt Miles—a corn, soybean, rice, and cotton farmer in Arkansas—$400 per ton for the 2021 growing season. At $1,100 per ton, Miles faces a 175% price increase for the 2022 growing season. Growing corn in 2022 will cost him an additional $180 an acre in fertilizer alone, compared with 2021.
The skyrocketing fertilizer market has made planning difficult. Producers are now faced with more issues to consider on top of the decisions they already make in a regular planting season. They must ask themselves what is the most cost-efficient crop going to be? Farmers must weigh the pros and cons of acquiring manure vs. buying synthetic fertilizer. How should they get the most out of the fertilizer they do spend their money on?
As the industry looks ahead to the 2022 growing season, farmers, analysts, and fertilizer companies have their own perspectives on what’s happening in the market.
MANY FACTORS INFLUENCE FERTILIZER AVAILABILITY AND PRICE
“Global fertilizer prices have reached record highs this year, in part due to soaring prices for the natural gas used to produce them, and severe storms in the United States that disrupted production,” according to a December 9 Reuters article.
Though it may seem to the outside observer there is a domestic supply shortage that is driving up the price of fertilizer, Kreg Ruhl, senior market manager at Growmark—an agricultural supply cooperative based in Illinois—doesn’t think that is the root of the problem. There is fertilizer in the United States; it is expensive primarily due to the fluctuation of the world energy market, which influences prices, he says. Ruhl believes fertilizer will remain expensive until that market evens out.
Prices on all inputs, not just fertilizer, are at record highs, climbing a historic average of at least 12% across commodities, according to Purdue University researcher and Ag Economy Barometer author Michael
Langemeier. He says some input prices are much more variable over time than others. The nitrogen sources used in fertilizer are tied to oil prices, and the more volatile the oil market is, the more the price of fertilizer will fluctuate.
A monthly poll conducted by Langemeier and fellow researcher James Mintert, the Ag Economy Barometer asks farmers to select from a pre-existing range of percentages and estimate how much they predict all commodity input prices will increase in the upcoming year.
In September, one-third of producers surveyed placed commodity input prices in the highest available percentage range, which, at the time, was “10% or more.”
A higher range option of “12% or more” was added to the survey in November due to the over 120% increase in the price of fertilizer, which skewed farmers’ average input increases to record highs. At the time, over half of respondents put price estimates in the “12% or more” range.
“Although much of the attention on increasing input costs has focused on this year’s dramatic rise in fertilizer prices, virtually all other input costs ranging from farm machinery to seed and fuel are on the upswing as well,” says the Ag Economy Barometer.
As fertilizer prices continue to increase into the 2022 production year, the Ag Economy Barometer plans to add a “15% or more” choice indefinitely when farmers evaluate the estimated prices of commodity-wide input increases.
Source: https://www.agriculture.com/news/crops/skyrocketing-fertilizer-market-has-farmers-analysts-and-companies-weighing-in
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