Mike Straumietis Explains What Drives Fertilizer Prices Worldwide
Among the main issues farmers face these days are the dramatic increase in fertilizer prices and the urgent concerns regarding availability, points out Mike Straumietis, Founder and CEO of Advanced Nutrients.
Comprising about 15 percent of total cash outlays for farmers in the U.S., fertilizer prices are the number one concern of farmers now that they are setting up their potential purchases for next year’s growing season. However, fertilizer prices have surged to more than 300 percent— with highly unpredictable delivery times—and farmers have been up in arms over this.
Facing Challenges Once Again
Growers have faced similar difficulties in the past. For example, in April 2008, nitrogen prices increased by 32 percent, phosphate prices by 93 percent, and potash prices by 100 percent. Prices remained this high throughout 2009 before dropping to pre-2007 numbers at the end of the year.
The 2008 fertilizer price hike was largely due to massive domestic and global demand, low fertilizer inventories, and the inability of the fertilizer industry in the U.S. to adjust its production levels. Today, these same factors—and several others—are profoundly affecting prices again.
The Impact of Nutrients Prices
Mike Straumietis also points out that raw nutrients also impact fertilizer prices. He mentions that the nutrients used in the production of the primary row crops in the U.S., such as nitrogen (in the forms of liquid nitrogen, anhydrous ammonia, or urea), phosphorus (monoammonium phosphate – MAP and diammonium phosphate – DAP), and potassium (potash), have all recorded increased prices.
Comparing these to September 2020 prices, ammonia has increased over 210 percent, liquid nitrogen to 159 percent, urea to 155 percent, MAP to 125 percent, DAP to 100 percent, and potash to 134 percent.
The Illinois Production Cost Report dataset revealed that anhydrous ammonia was up 118 percent from $656 per metric ton, urea surged 101 percent from $453 per metric ton, liquid nitrogen hiked 84 percent from $305 per metric ton, DAP jumped 50 percent from $550 per metric ton, MAP climbed 61 percent from $555 per metric ton, and potash rose 61 percent from $485 per metric ton.
Mike Straumietis notes that apart from these, there are yet more factors affecting fertilizer prices.
The Demand Worldwide
Because fertilizer is well-known as a global commodity, it can be affected by market factors beyond the reach and control of American producers. In fact, approximately 44 percent of total fertilizer materials are exported.
Global export has a considerable impact on fertilizer prices since fertilizer production is affected not only by what is happening in the place it is produced but also by the demand for fertilizer products from other countries. Shipping rates are a huge factor as well.
According to Mike Straumietis, it is estimated that a third of fertilizer demand worldwide is driven primarily by six major crops. These crops are corn, wheat, rice, vegetables, fruits, and soybeans.
Corn takes about 16 percent of the global farm-use fertilizer demand, with wheat a close second, at approximately 15 percent. Rice represents about 14 percent of the same global farm-use fertilizer demand, while vegetables are at 9 percent, and fruits and soybeans are at 7 and 5 percent, respectively.
Since the U.S. is one of the world’s largest corn, soybean, and wheat producers, it is also naturally a leading fertilizer consumer. However, Mike Straumietis says that with the development and advancement of technologies relating to on-farm products, the need and utilization of fertilizer in the U.S. has gone down, even with increased planted acres of these crops.
Mike Straumietis and the Advanced Nutrients team, which consists of highly skilled Ph.D.-level scientists, developed the first and only complete growing system that optimizes all phases of the vegetative and bloom cycles to unlock the true genetic potential of crops. Advanced Nutrients helps growers in more than 110 countries unlock the genetic potential of their plants.