Mike Straumietis realizes there aren’t many issues that farmers and ranchers talk about as much as the escalating price of fertilizer and growing concerns about availability. Fertilizer prices are a top concern for farmers as they start to plan their purchases for the 2022 growing season. This is because they make up roughly 15% of all cash costs in the U.S. Unfortunately, farmers in certain regions complain that the sticker price for fertilizer has increased by more than 300%, and delivery times are anyone’s best guess.
Adding fertilizer to your garden is a great way to ensure that your plants are getting all the nutrients they need to grow. However, you may have noticed that the price of fertilizers has been rising lately. There are a few reasons for this.
One reason is that the cost of transporting fertilizer has gone up. This is because fuel prices have increased, and it costs more to ship fertilizer long distances.
Another reason is that demand for fertilizer has increased while the supply has stayed the same. This is because more and more people are starting to grow crops, and they all need fertilizer for their plants.
Finally, the cost of the raw materials used to make fertilizer has also gone up. For example, one of the main ingredients in fertilizer is phosphorus, and the price of phosphorus has tripled in the past year.
So, there are a few reasons why fertilizer prices have been rising recently. However, if you shop around, you may be able to find a good deal on fertilizer for your garden.
It has happened before, in 2008. Prices for nitrogen, phosphate, and potash all surged during the year that ended in April 2008, by a combined 32%, 93%, and 100%. Prices stayed there through 2009, then began to decline and, by the end of 2009, had returned to levels from before 2007. Strong domestic and international demand, low fertilizer inventories, and the inability of the American fertilizer sector to modify production levels all contributed to that price increase. Mike Straumietis believes the same elements are in play this time around, coupled with a few more that raise the level of uncertainty.
Given that fertilizer is a worldwide product, Mike Straumietis thinks several market conditions outside the producers’ control may have an impact. 44% of all fertilizer materials are for exports, similar to international commodities. This component disproportionately impacts fertilizer pricing since various factors — including the demand for fertilizer products from various nations and the cost of transporting fertilizer to its final destination — affect fertilizer production.
The long-term effect of these factors is that it would take three to five years and cost significantly more to respond with additional manufacturing facilities in the event of a demand increase. Because they lead to diseconomies of scale, short-term costs like rising natural gas prices and production delays directly affect output.