Why Is Fertilizer So Expensive
With the challenges of 2020 behind us and exports to China on the increase, grain prices have risen, which is good news for growers. The bad news? The price of fertilizer is moving in the same direction, especially nitrogen.
Since the end of 2020, nitrogen fertilizer prices have risen nearly 50%. It’s not the actual price per ton that’s unprecedented, it’s the aggressive speed with which prices have increased.
So why is fertilizer so expensive? Two major factors have driven this shocking increase in fertilizer prices: bad weather and an opportunity for input providers to capitalize on supply and demand.
Natural gas is a key input for the production of ammonia fertilizer. Texas is the largest natural gas-producing state in the US and the severe winter storms this February, which left millions without power, cut the state’s production in half and reduced exports out of state. The effects of the natural gas shortage have rippled out to ammonia production, reducing supply to the market.
Nitrogen is the top nutrient for corn and since grain prices are up, growers are planting more, increasing demand for fertilizer. With fertilizer supply low and grain prices high, the market responded. A relatively small number of suppliers of nitrogen fertilizer have a hold on the market, and as grain prices rise, input providers want their cut.
While many growers have already paid for or locked in their prices for fertilizer this season, what about those who want to apply fertilizer in-season based on their crop condition? And what about next year? All growers could be facing significant additional cost per acre for the 2022 season if nitrogen prices don’t drop. But for nitrogen prices to go down, grain prices would likely also have to drop.
That’s a tough position for growers — as the value of their production increases, so do input costs. How can growers protect their yields and profits as fertilizer prices today sky rocket?
In the face of this unprecedented price increase, growers who still need to purchase nitrogen this year are looking for alternatives in order to maintain revenue and yield. One option is SOURCE®, a microbiome activator that can replace 25 – 50 pounds of nitrogen per acre more cost-effectively than high priced synthetic fertilizer.
SOURCE stimulates the nitrogen-fixing microbes in the root zone to give crops access to more of the nitrogen stored in the field. It can be used to reduce nitrogen needs, or can be used to increase yield, both improving a grower’s bottom line. In some cases, SOURCE can do both — reduce nitrogen and increase yield. At today’s prices, a grower could replace 25 lbs of nitrogen per acre with SOURCE for the same price, with the added benefit of contributing macro nutrients such as phosphorus. Another option would be to add SOURCE to improve yield and capitalize on high grain prices.
Unlike nitrogen fertilizers, SOURCE is not prone to loss. On average, 30 to 50% of applied nitrogen is lost through leaching, runoff, denitrification, and volatilization, which not only affects a grower’s bottom line, but has serious environmental impacts. In groundwater and surface water, nitrogen can render the water undrinkable. In rivers, lakes, oceans, and estuaries, it contributes to algal blooms, oxygen depletion, and fish die-offs. It can also be released as nitrous oxide, a harmful greenhouse gas. With SOURCE offering a consistent, in-season supply of nitrogen, growers can help both their bottom line and the environment.
So much of a farm’s economic success relies on factors beyond a growers control, especially when it comes to plant-essential inputs like weather and the price of nitrogen fertilizer. With a product like SOURCE, growers are regaining some control.
Growers interested in discovering how SOURCE will perform on their fields can use our new Performance Optimizer; by simply inputting a field’s pH, OM, and CEC, growers can receive a predicted yield lift for that specific field. To find out where to purchase SOURCE and for more information, contact email@example.com.