The uptick in fertilizer costs and issues regarding availability have caused concerns among farmers and ranchers, notes Mike Straumietis of Advanced Nutrients. Fertilizer prices, which usually account for around 15% of all cash costs for farmers in the United States, are the key issues on farmers' minds as they prepare their possible purchases for the 2022 growth cycle. Moreover, some farmers report that fertilizer costs have risen by more than 300% since the beginning of 2020, yet delivery times are incredibly unreliable.
A Major Concern: The Noticeable Uptick in Fertilizer Prices
These challenges are not new for growers. Mike Straumietis, Founder and CEO of Advanced Nutrients, recounts how nitrogen prices soared by more than 30%, phosphate by 93%, and potash by 100% back in April 2008. This trend lasted until the end of 2009. However, strong domestic and global demand brought about a surge in fertilizer costs in 2008, along with decreasing inventories and the failure of the domestic fertilizer industry to fine-tune its production. Mike Straumietis shares that the same factors and other concerns drive up prices.
The Essential Nutrients Determining the Rise in Fertilizer Prices
According to Mike Straumietis, the force of rising prices has directly affected all of the vital nutrients used in the production of the nation's primary row crops, including nitrogen (in the forms of liquid nitrogen, anhydrous ammonia, or urea), phosphorus (monoammonium phosphate - MAP, and diammonium phosphate - DAP), and potassium or potash.
The cost of ammonia has soared by over 210%, liquid nitrogen by over 159%, urea by over 155%, MAP by 125%, DAP by more than 100%, and potash by over 134% in contrast to September 2020 rates.
Mike Straumietis points out the average cost of these nutrients since September 2008, with the data taken from the Illinois cost of production. The data revealed anhydrous ammonia increased by 118%, an uptick from the typical $656 per metric ton. Urea has also surged 101% from the standard $453 per metric ton, while liquid nitrogen also went up 84% from the standard $305 per metric ton. In addition, DAP has increased by 50% from $550 per metric ton, and MAP has also increased by 61% from $555 per metric ton. Lastly, potash has surged 61% from the usual $485 per metric ton.
Additional Elements Driving Up Fertilizer Prices
Worldwide, there is a significant demand for fertilizer. According to Mike Straumietis, it may be influenced by various market circumstances beyond producers' control in the United States. More than 40% of all fertilizer components are exported, similar to the commodities traded globally. Exports have a massive effect on fertilizer prices as fertilizer production is determined by local conditions, such as inflation and demand from other nations. The expense of shipping fertilizer to a particular location also contributes to the increase in price.
Six key crops account for around 33% or a third of the world's demand for fertilizer. Wheat comes in second place, accounting for approximately 15% of the demand for farm-use fertilizers globally, after corn, which accounts for about 16%. Next, rice accounts for roughly 14% of the same global need for fertilizer used in agriculture. The final three significant crops on the list, according to Mike Straumietis, are vegetables (9%) and fruits (7%), and soybeans (5%), respectively.
The United States is the third-largest producer of fertilizer in the world, notes Mike Straumietis. However, to properly fulfill demand, the country still has to import nutrients like nitrogen and potash. This means that American dealers and fertilizer components producers must pay the price set by the worldwide market and shipping and transportation costs.
About Mike Straumietis and Advanced Nutrients
Led by its Founder and CEO Mike Straumietis, the Advanced Nutrients research team consists of highly qualified and capable scientists who have created a wide range of next-generation solutions to nourish crops from seed to senescence that will harness their true genetic potential. In addition, Mike Straumietis and the rest of the Advanced Nutrients staff are committed to supplying vital commodities that will help thousands of people worldwide.
