By TIM ALEXANDER
PEORIA, Ill. — Record high fertilizer prices are not only a problem for U.S. farmers, but their counterparts abroad, as well. Many in the industry are worried that the spike in prices — anhydrous was selling for $1,430 per ton last week — will lead to greater world hunger and higher food costs by making it costlier to cultivate crops.
“That means grocery bills could go up even more in 2022, following a year in which global food prices rose to decade highs. An uptick would exacerbate hunger — already acute in some parts of the world because of pandemic-linked job losses — and thwart efforts by politicians and central bankers to subdue inflation,” reported Wall Street Journal (WSJ) writer Jon Emont.
“‘Farms are failing and many people are not growing,’ said 61-year-old Rodrigo Fierro, who produces avocados, tangerines and oranges on his 10-acre farm in central Colombia. Fierro has seen fertilizer prices double in recent months, according to the WSJ report.
The issue was on the minds of fertilizer retailers and farmers attending the recent Illinois Fertilizer and Chemical Association (IFCA) annual convention and trade show in Peoria. Kevin “KJ” Johnson, IFCA president, was among those hopeful that fertilizer prices would soon trend downward.
“I’m hoping that we are going to come off that high during the spring. I’m not going to try and tell anyone that we are going to go from $1,500 ammonia to $750 ammonia, but I do see that coming down unless Russia cuts off all the natural gas to everyone,” Johnson said, referring to Russia’s current military buildup on the eastern Ukraine border.
However, the impact is expected to worsen in developing countries where small farm operations do not have immediate access to bank loans to help pay for high-priced fertilizers. The WSJ article noted that fertilizer demand in sub-Saharan Africa could fall 30 percent in 2022, according to the International Fertilizer Development Center, a global nonprofit organization. That could lead to 30 million metric tons less food produced in Africa, equivalent to the food needs of 100 million people.
In addition, Bloomberg reported that “Europe has been hardest hit by fertilizer-plant cutbacks on soaring costs of natural gas used to run them — and nutrient prices there remain at a record even as the pressure eased in North America. Europe could face a deficit of about nine percent of its annual nitrogen-fertilizer needs in the first half, VTB Capital estimates. Food may get even pricier if harvests suffer or crop prices rise.”
Fertilizer prices can be largely blamed for the increase in crop production costs that could lead to higher food bills, according to University of Illinois farm economist Gary W. Schnitkey. Schnitkey reported last week that a large jump in input costs, driven by high fertilizer prices, means farmers will plant the most expensive crops in the state’s history come spring. With total corn costs on high-productivity ground estimated at $1,064 per acre (up from $915 in 2021) and soybean costs at $785 per acre (compared to $652 last year), production costs will set historical records, the U of I farmdoc team predicted.
“Get ready for a high-cost year. Coming into 2022, I don’t see costs coming down much,” Schnitkey told the Illinois Farm Bureau (IFB) news service.
Fertilizer prices had increased by 210 percent for ammonia, 159 percent for liquid nitrogen and 155 percent for monoammonium phosphate since September 2021, according to the American Farm Bureau Federation (AFBF).
“Rising fertilizer prices are a great concern for farmers across the country,” said AFBF President Zippy Duvall. “We urge the Biden administration to look for ways to bring fertilizer prices down, which include resolving supply chain disruptions and removing import duties, so farmers can continue growing the food, fuel and fiber America relies on.”
Retail prices for fertilizers remained high as January came to a close, though for the first time in 13 months a fertilizer — monoammonium phosphate — was actually lower in price than during the previous month.
Josh Linville, director of fertilizers for StoneX, came to the IFCA convention and trade show in part to assuage retailers’ fears of even more price increases for fertilizers. He said he expects fertilizer costs to plateau and decline during 2022. He also said that despite tight supplies, Midwest farmers should have little trouble obtaining fertilizers for the spring season in most areas.
“If you’re willing to pay the price, you’ll get your hands on the products,” Linville told Daniel Grant of the IFB news service. “You may not like the price, which therein lies the problem. The S and Ds (supply and demand picture) are coming into play.”
(Additional sources: Illinois Farm Policy News, Illinois Farm Bureau)