A global shortage of nitrogen fertilizer is driving prices to record levels, prompting North America’s farmers to delay purchases and raising the risk of a spring scramble to apply the crop nutrient before planting season.
According to Ag Week, higher grain prices are only part of the cause – it is actually a rare combination of supply chain issues that are tightening supplies.
Josh Linville, director of fertilizer for Stone X Financial Inc. based in Kansas City, Missouri, said fertilizer prices were higher in 2008, but the 2021 issue is an unprecedented global shortage.
“This is vastly different,” he said. “Because it doesn’t matter what you’re willing to pay, you can’t get the product.”
We can look back to February this past year when a bout of exceptionally cold weather hit parts of Texas, according to The Weather Network. Then, in August, Hurricane Ida made landfall in Louisiana as a Category 4 storm, interrupting fertilizer processing plants.
The hurricane, all by itself, contributed to a global shortage of nitrogen fertilizer, worsened by surging demand for natural gas in Europe, a key production component, Reuters reports.
We can add the disruptions to the supply chain caused by the coronavirus pandemic and related vaccination mandates. Vaccine mandates have contributed to a railcar shortage, with some workers refusing to comply.
Some trucking companies are also facing a driver shortage, while others are re-distributing their fleets to meet the demand for flatbeds. According to Argus Media, global nitrogen fertilizer sales were $53 billion in 2020. So far, in 2021, prices have been 80 percent higher than that.
All this, according to some experts, is behind the rising cost of fertilizer and could translate into higher food prices.
“Right now, we have an almost a perfect storm of high energy prices, China cutting its production because of higher energy prices, as well,” agricultural economist John Beghin of the University of Nebraska tells Ag Web.
For now, in the U.S., nitrogen fertilizer supplies are adequate for applications before winter, said Daren Coppock, CEO at the US-based Agricultural Retailers Association. And applying fertilizer now will help to reduce the spring workload for farmers.
However, because the price of fertilizer has jumped so high, some farmers are delaying purchases, risking a scramble for supplies during their busiest time of year, Coppock said.
However, delaying fertilizer purchases until spring runs the risk of further supply chain congestion as farmers rush to apply fertilizer and plant seed during a tight window.
