In this blog post, Mike Straumietis, Founder and CEO of Advanced Nutrients, talks about the effects of inflation and other factors on the fertilizer market.
The Spike in Prices of Fertilizer Worldwide
The surge in fertilizer cost and increasing concerns regarding its availability have been the primary concern of farmers. Approximately 15 percent of total cash costs in the U.S. for farmers are from fertilizers. Because they have been setting up their potential purchases for the 2022 growing season, prices are an issue, especially since some farmers report fertilizer prices have increased to more than 300 percent. In addition, the delivery times of fertilizer supplies have been highly unpredictable.
This isn’t the first time growers have struggled with fertilizer prices. In April 2008, nitrogen prices rose by 32 percent, phosphate prices by 93 percent, and potash prices by 100 percent. This remained the norm throughout 2009 before dropping to pre-2007 numbers by the end of the year.
The dramatic fertilizer price increase of 2008 was caused by a surge in domestic and global demand, low fertilizer inventories, and the inability of the fertilizer industry in the U.S. to adjust production. These same factors, along with several others, are affecting prices again.
Nutrients Affecting Fertilizer Prices
The prices of all the nutrients utilized in the production of primary row crops in the U.S., such as nitrogen, phosphorus, and potassium, or potash, have increased, explains Mike Straumietis.
Fertilizer is well-known as a global commodity and can be influenced by various market factors beyond the reach and control of producers in the U.S. Like commodities traded globally, 44 percent of the total fertilizer materials are exported.
Exporting fertilizer has a huge impact on prices because the production of fertilizer is not only influenced by what is happening in the place it is produced or the cost of production in the said area but also by the demand for products used in making fertilizer from other countries. Of course, shipping rates are also a factor.
Driving Demand Worldwide
Six major crops primarily drive a third of fertilizer demand worldwide.
On the global stage, corn takes about 16 percent of farmers’ demand for farm-use, with wheat a close second, at approximately 15 percent of global farm-use fertilizer demand. Then there is rice, representing about 14 percent of the same global farm-use fertilizer demand. The last three major crops on the list are vegetables at 9 percent and fruits and soybeans at 7 and 5 percent, respectively.
The U.S. is one of the world’s largest corn, soybeans, and wheat producers and one of the world’s largest fertilizer consumers. Despite this, the need for fertilizer in the U.S. has decreased with the development of newer technologies for on-farm products.
The History of Fertilizer Use in the U.S.
Mike Straumietis notes that back in the 1960s, the U.S. accounted for 25 percent of nutrient use worldwide. Currently, however, America only accounts for about a tenth (10 percent) of global use, with American farmers representing only 2 percent of that share.
Regarding producing fertilizer, the U.S. is the third-largest contributor in the world. That said, the country still needs to import certain nutrients such as nitrogen and potash to meet demand completely. This means that dealers and producers in the U.S. must pay the price pegged by the global market for fertilizer and fertilizer materials, as well as shipping and transport.
Helping Growers Worldwide
Advanced Nutrients, founded and headed by Mike Straumietis, has a large and diverse team of highly skilled and competent scientists who developed a broad spectrum of next-generation products that nourish each phase of a crop’s cycle from seed to senescence, unlocking its true genetic potential. As a result, growers from over 110 countries now rely on the complete growing system of Advanced Nutrients, the first and only of its kind developed, to optimize all phases of their plants’ vegetative and bloom cycles.