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Fertilizer prices have more than doubled over the past year. What events have caused these prices to go up, what impact does it have on overall farm costs of production, and what can farmers do to keep fertilizer prices from eating through all of their profits?
Two years of increasing costs
The steady climb in fertilizer costs started in 2020. Much of the initial rise in price can be attributed to rising commodity prices, which drove growers to take advantage of a strong market by producing more bushels. In the following two years, however, a number of factors pushed fertilizer prices on a dramatic run.
- Earlier this year, fertilizer factories in the U.S. were shut down due to cold weather.
- Then, the U.S. International Trade Commission imposed a tariff on fertilizer imports as it investigated a domestic supplier's concern that Russia and Trinidad and Tobago were dumping Urea Ammonium Nitrate (UAN) fertilizer on the U.S. market.
- Finally, the ongoing war in Ukraine has led both Russia and Ukraine to prioritize their own domestic food supplies and suspend fertilizer exports; Russia is the world’s largest exporter of fertilizer.
In 2020, fertilizer cost about $100 per acre for producing corn. Today, to produce that same acre of corn, growers will pay an average of $250 per acre for fertilizer.
The impact on cost of production
During the last commodity and fertilizer price spike between 2011 and 2013, fertilizer costs averaged $1 per bushel of corn. In 2022, even with 14% higher yield due to improved seed genetics, fertilizer cost will hit $1.40 per bushel. That’s 40 more cents for every bushel that’ll leave farmers’ pockets this year.
What can farmers do to limit the impact of these rising prices? Let’s think about it in two categories:
- Improving fertilizer efficiency. This means using farming practices that reduce fertilizer loss from denitrification, leaching, volatilization, or erosion. For many farming operations, these losses will rob half or more of their applied fertilizer, meaning that it never gets to the cash crop.
- Reducing total fertilizer needs. This really means finding alternative sources to meet crop productivity needs. Improving soil health and soil organic matter can create free fertilizer by increasing total nutrient capacity within the soil and improving the soil’s ability to deliver nutrients to crops. Cover crops can provide significant fertilizer value while reducing costs and providing additional benefits to your operation; from weed management to improved soil structure and water management capability to generating carbon credits, cover crops blends are an affordable solution.
To understand how you can keep more applied fertilizer or benefit from alternative fertility sources, join next week’s Profitability Strategies webinar – hosted on April 14 – to hear from a seasoned agronomist and carbon farmer on the agronomic tips and tricks for navigating this expensive fertilizer market.
This article contains perspectives from a third party source. A number of variables can affect outcomes on any particular land. Indigo does not guarantee any results with respect to agronomic outcomes, soil health, financial or profitability outcomes, carbon dioxide equivalents sequestered, carbon credits generated or amount or eligibility of payments with respect to any individual landowner or operator. Each participant should carefully consider their own particular situation before adopting any practices and should not rely solely on the information provided in this article.