Farmers Pull Back Fertilizer Prices – Ohio Ag Net

Written by Matt Reese

Instead of yield records, new local equipment purchases, who bought, and what farm is around the corner, conversations among farmers this winter have largely centered instead on rising fertilizer costs.

“The talk in the café around the neighborhood is different every year. Farmers always seem to have something to shout about a little bit. This year is definitely compost. The last couple of years we’ve seen moderate, manageable prices for fertilizer. Then all of a sudden we saw some commodity price increases and boom – what should have been.” “The fertilizer prices have gone up,” said Ben Klick, who raises crops and livestock in Stark County and serves as president of the Ohio Corn and Wheat Growers Association. Our dry, as well as the liquid, availability will also be interesting this spring. I don’t have a big building to store all my dry and liquid fertilizers, so we’re not only concerned about prices and whether they’re going to come off, but we’re also concerned about being able to get availability in season. ”

Even with better prices for crops, massive increases in fertilizer costs are making it difficult for acres of corn to weed out on some farms.

“We were putting some numbers together after the harvest because we made a lot of purchases in the fall of the year. Just 800 acres of corn would cost us a $102,000 increase in price just for liquid fertilizer 28% from what we used in 2021 to what we’ll be using in,” Click said. 2022. “This is the talk of the town. We feed a lot of corn to livestock, so we will always need a certain amount of corn no matter what. Many people are staying away from corn versus soybeans and if they are willing to switch their rotations. It may have to do with availability and the markets around you. If you have a strong corn foundation, you may be able to grow some corn and take the risk to take advantage of those better prices. I have a lot of neighbors I’ve talked to, some of which are large operations and some of which are small acres. They will do what pencils are. Each person’s operations are different. Some pencils keep the same spin and a lot of others won’t incur this input cost up front and may weigh a little bit more on the soy side this year.”

Klick is also concerned about the ripple effect of higher input costs across the rest of the supply chain.

“We put the cost of production on the acre of crops, but we have a cost of production on the livestock as well. When you get higher grain prices, you have to come up with higher prices for the livestock, but the input costs to feed the livestock seem to be much higher than the other end when we go to sell the livestock,” said Klick. : “When you try to forward knots and put a pencil to things, it kind of makes you wonder sometimes.” “My grandfather always used to tell the farmers he always complained about and they were never happy. But when you sit down and think about some of these things, if one thing goes up you can cut it. When you start calculating what you can do about the cost of production when it’s all over, you have to start scratching your head and wondering what you should do.”

With his participation in Ohio Corn and Wheat, Click learned more about this problem that goes beyond Stark County coffeehouses. Through the National Corn Growers Association, governmental organizations (including Ohio State) commissioned two studies to look at fertilizer prices—one focused on nitrogen and one on phosphorous.

In response to the phosphorous study, the NCGA and OCWGA have had multiple conversations with Mosaic regarding tariffs that the US International Trade Commission imposed in March at the fertilizer company’s request. Since then, fertilizer prices have risen dramatically.

“Mosaic’s situation to date has been a masterpiece of irresponsible corporate social responsibility,” according to a letter from the NCGA.

The speech highlighted the issues that Mosaic put up for its customers, and noted that the company’s monopoly creates serious problems for farmers. It is estimated that tariffs of between 30% and 70% on phosphate imports would equate to roughly $480 to $640 million in added fertilizer bills for American farmers.

“…only 15% of phosphorous imports now arrive in the United States duty-free,” the letter read. “Experts say that using Trade and ITC to manipulate the supply curve really sets the price for farmers.”

Regarding nitrogen, the country’s corn growers are concerned about a petition filed by CF Industries, one of the country’s major nitrogen producers, with the US International Trade Commission to impose new tariffs on nitrogen fertilizers imported from Trinidad and Tobago and Russia. The US Commerce Department has since released a preliminary result recommending tariffs, despite these concerns and the staggering price increases. The proposed tariffs are 10% on urea ammonium nitrate (UAN) from Russia and 2% on UAN coming from Trinidad and Tobago. Based on prices as of the end of October, a 10% tax on UAN import would mean an additional price increase paid by farmers of $102.25 per ton. At about 8 acres per ton, that would translate to an additional $12.78 per acre in nitrogen costs for all growers.

“A company like CF Industries is trying to impose tariffs on other countries for importing nitrogen into this country,” Klick said. They expect this to raise the average nitrogen price by another $100 per ton. This will have a drastic ripple effect in the agricultural country.”

From Texas A&M University The Economic Impact of Nitrogen Prices on US Corn Producers

A new economic analysis published by researchers at Texas A&M University in January finds that pending tariffs on nitrogen fertilizers will create additional shortages and cause farmers to increase prices even more.

“As part of this study, we performed a historical analysis going back to 1980 and found that fertilizer costs tend to rise when corn yields increase,” said Joe Outlaw, principal investigator on the study at Texas A&M University. “In particular , [today’s] Prices tend to rise significantly even after accounting for natural gas prices and higher demand.”

The study found that the price of anhydrous ammonia increased by $688 per ton – $86,000 for a 1,000-acre farm – from the end of 2020 through the end of October 2021.

“This issue is almost all we hear about today at almost every farmer’s meeting and gathering — the price of inputs has gone up. When farmers talk about 300% cost increases compared to last year, it raises red flags,” said Tad Nicholson, CEO of Ohio Korn. & Witt.” “Obviously there are disruptions to the supply chain with everything from tennis shoes to fertilizer, but nothing that amounts to a 300% increase. This makes us ask a lot of serious questions. One of the questions we’re really focused on right now is the tariffs on imported fertilizer that will drive prices above today’s levels in the future. We will increase the price of locally produced fertilizers as well as imported fertilizers. And when you set a tariff, it’s for 5 years. This isn’t a one-year photoperiod as farmers can expect things to go downhill next year. This is a multi-year issue. All other factors that go into the fertilizer price will take time to work through the system. Today we focus on these definitions. This is an unfair time to impose tariffs on fertilizers when we have all this turmoil in the market.”

A&M’s research also found some clear trends in the fertilizer market.

“It clearly shows that before 2010, the price of nitrogen fertilizer followed the price of natural gas. This is what you make of nitrogen fertilizer, so when the price of natural gas went up, the price of fertilizer followed suit. When natural gas goes down, the price of natural gas goes down. Nitrogen too. This stopped happening around 2010 when it broke off from that price. “Now the fertilizer price basically follows the price of corn,” Nicholson said. “Fertilizer companies are no longer pricing fertilizers based on the costs of their natural gas inputs. They price fertilizers. Based on how much money the farmers have in their pockets. We’re saying it’s not fair, especially at a time like now with so much turmoil in the market.”

From Texas A&M University The Economic Impact of Nitrogen Prices on US Corn Producers

So far, talks with Mosaic have yielded no indication that the tariff situation will change. Nicholson hopes CF Industries is ready to talk and listen.

“Everyone who uses corn should focus on this. If we produce less corn either through lower acres or lower yields due to less fertilizer use, it will raise the price of corn and every end user will feel that,” Nicholson said. Livestock or an ethanol plant, they will all feel these effects.”

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