According to a report in USA Today, farmers in Arcanum, a region of western Ohio, are concerned about maintaining their businesses as costs have skyrocketed this year due to an essential commodity.
Fertilizer price increases indicate that farmers are concerned.
“Last year, nitrogen (which is used as a fertilizer) was around $170 a ton, and this year at the local dealer it was around $600 a ton,” local farmer Scott Stickley told USA Today.
Stickley is in desperate need of nitrogen. Before planting, fertilizer is applied, and a pair of tanks perched atop the seed planter trailing Stickley’s tractor sprinkled liquid nitrogen as the machine sowed corn seeds.
According to him, the fertilizer price increase added about $50 per acre to the farmer’s total costs.
The prices of three of the world’s most commonly used fertilizers, liquid nitrogen, potash, and phosphorus, have more than doubled in the last two years.
“We’re nervous,” he revealed.
According to a survey conducted by Minnesota-based data analysis firm DTN, the average price of liquid nitrogen was $730 per ton on May 1, diammonium phosphate was $1,050 per ton, and urea was $1,012, all of which are all-time highs.
“Fertilizer makes up about 30% of the cost of growing an acre of corn,” said Gregory Ibendahl, a farm management teacher for the Kansas State University extension service. “But with the fertilizer price increase, now it’s closer to 35%.”
President Joe Biden promised to address the issue at a recent press conference. His administration promised a $100 million program to increase fertilizer efficiency and find less expensive substitutes.
Meanwhile, farmers don’t have viable alternatives to fertilizer, according to Gary Schnitkey, chair of the Agriculture and Consumer Economics Department at the University of Illinois.
Why are prices rising?
Fertilizer is not immune to the economic factors that drive inflation. According to Ibendahl, nutrient prices frequently rise in tandem with corn prices, which are approaching all-time highs.
Natural disasters, as well as the high price of natural gas, from which nitrogen is obtained, exacerbate the problem.
Last year, China reduced nitrogen fertilizer exports and Europe halted nitrogen fertilizer production. He claimed that high natural gas prices in both locations made fertilizer production prohibitively expensive.
In addition, several nitrogen fertilizer plants in the New Orleans area were forced to close in the aftermath of Hurricane Ida, which hit Louisiana last August.
The Ukraine war struck just as supply chain snarls were unraveling.
Russia, which is sanctioned for its unprovoked attack on its smaller neighbor, provides roughly 20% of the world’s nitrogen fertilizer.
If fertilizer prices remain high, food shortages are unavoidable as farmers cut back to save money.
Farmers can still make good money
Fortunately for farmers, commodity prices are skyrocketing and show no signs of abating. Corn, for example, is currently priced at $7.79 per bushel, up from an average of $5.75 in 2021.
Farmers, on the other hand, will not see a windfall until harvest, leaving them to pay inflated input costs now.
Farmers who lose crops due to bad weather will not be helped by high corn and soybean prices.
“If we have a drought or something dramatic that causes poor yields,” said farmer Roger Tobias, commodity prices will not cover expenses.
Scott Stickley believes he will make it through the year if corn prices remain high. In 2023, however, he will be unable to protect himself from today’s exorbitant fertilizer prices. “Next year, everybody is going to be in trouble,” he stated.
Meanwhile, he can only hope that the weather cooperates and that input costs do not rise even further.
“There’s a lot of faith when you’re a farmer,” Stickley said.