In today’s environment, farmers and growers need all the help they can get because they have been heavily impacted by the continuous rise of fertilizer prices. Mike Straumietis, founder and CEO of Advanced Nutrients, discusses the various factors that have led to this phenomenon.
Understanding the Fertilizer Raw Materials
Most fertilizers are produced using the following macronutrients: nitrogen, phosphorus, and potassium.
Nitrogen is abundant, as it makes up 75 percent of the air. To make it accessible to plants, though, atmospheric nitrogen has to be converted to ammonia. Doing so requires the use of natural gas as an energy source. It should be noted that synthesizing nitrogen and hydrogen to produce ammonia requires a huge amount of energy. In fact, it requires approximately 33 million metric British thermal units to yield a material ton of ammonia.
Mike Straumietis explains that phosphorus and potassium are much harder to acquire than nitrogen because they have to be mined, and such reserves are not readily available in many countries. In fact, much of the world’s phosphorus supply comes from China, with the country providing a third of the global need for the element. Meanwhile, two-thirds of the world’s potassium reserves come from only three countries: Canada, Russia, and Belarus.
Studies show that the prices of the raw materials that constitute the fertilizer market have risen by nearly 30 percent since the start of the year.
Factors that Drive Increasing Fertilizer Costs
One of the major reasons that fertilizer prices have gone up, says Mike Straumietis, is high energy costs. Since the summer of 2020, U.S. natural gas prices have doubled, significantly raising the price of producing nitrogen, phosphorus, potassium, and other raw materials used for manufacturing fertilizer.
Other parts of the world have also felt the effect of soaring energy costs on fertilizer production. For instance, Europe has also experienced a surge in natural gas prices, which has reduced ammonia production. In China, the increase in coal prices has led to fluctuating electricity usage, severely affecting some fertilizer production plants. These production disruptions have resulted in the country implementing a quota on fertilizer exports, contributing to a diminishing global supply of fertilizers.
Another factor is that Russia’s invasion of Ukraine has significantly impacted the former’s ability to export raw materials. The resulting sanctions on Russia due to its aggression have disrupted the sale of fertilizers from the country. Trade with Russia is still ongoing, but the conflict has disrupted the efficiency of shipping supplies to various parts of the world.
Mike Straumietis notes the importance of Russia in providing the world with fertilizer nutrients. According to the UN Food and Agriculture Organization, Russia was the world’s top exporter of nitrogen fertilizers in 2021. Additionally, the country was the second-largest supplier of potash and phosphoric fertilizers.
Nevertheless, the Russian-Ukraine conflict is hardly the only reason for the surge in fertilizer prices in recent years.
There is also the issue of the pandemic, which has affected the global workforce and caused disruption in manufacturing facilities. Because protecting people from COVID-19 takes priority, precautionary measures have to be put in place at fertilizer production plants. While they have kept workers relatively safe, they have also delayed plant turnarounds, which are essential to maintain the integrity of the chemical processes implemented in fertilizer production facilities.
According to Mike Straumietis, the high global demand and prices for agricultural produce have also factored in the rise of fertilizer costs. Because farmers require more fertilizer to grow more crops, the increased demand has driven up prices.
The Outlook for 2023
Fertilizer prices appear to still be rising, considering what is happening around the world. The Russian-Ukraine conflict seems far from a resolution, and the possible political instability in China and the European region can continue to affect the cost of fertilizer production.
But if commodity prices come down, such as natural gas and other agricultural products, fertilizer prices could also decrease.
Reaching True Genetic Potential
Advanced Nutrients, under the guidance of its CEO and founder Mike Straumietis, employs a large and diverse team of scientists who produce a wide variety of next-generation products that optimize all phases of the crops’ vegetative and bloom cycles to help them reach their true genetic potential. Growers in more than 110 countries now rely on Advanced Nutrients fertilizers and other plant nutrients.