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What's Driving Fertilizer Costs?

What's Driving Fertilizer Costs?

Before the pandemic, fertilizer prices had fallen to some of the lowest levels in years. Today, it doesn’t appear as if there’s any ceiling at all on fertilizer prices, which have zoomed past previous all-time highs. Fertilizer costs make up more than 15% of an average grower’s total costs, making this the most important issue on growers’ minds heading into the 2022 planting season. What happened? And more important, what can farmers do to alleviate these costs?

Understanding the Rapid Increase in Fertilizer Price

Several factors have contributed to the gut-wrenching rise of nitrogen and other key fertilizers, such as phosphorus and potassium. Arctic weather and summer hurricanes hampered production in the country’s top manufacturing states, including Louisiana, Texas and Oklahoma. Supply chain issues, a direct result of the pandemic, are another major factor, as key producing countries such as Belarus and China curbed production and exports. Soaring freight costs and logistics issues further complicate matters.

But the largest factor, by far, is the correlation between the price of nutrients and the prices for natural gas and corn, both of which have risen to new heights. Natural gas is a primary input for nitrogen fertilizer, accounting for 80% of its variable costs. Rising corn prices typically signal more corn acres and more nitrogen use, which leads to higher fertilizer prices. As the costs for corn and natural gas increase, the price of nitrogen fertilizer rises accordingly.

Limiting the Impact of High Fertilizer Prices

Experts expect a massive shift away from corn in 2022 and into commodities that use fertilizer at a lower rate, such as soybeans or wheat. This response is due to the cost of fertilizer and the expectation that some retailers won’t be able to deliver fertilizer products on time. Growers who plant corn must consider whether the increased cost of fertilizer can be recovered by cash receipts, assuming that commodity prices stay high. At the same time, they look for opportunities to reduce costs.

There are many ways that growers can be more economical with their fertilizer. Some of these include:

  • Soil testing may identify areas where fertilizer can be applied more economically.

  • Variable-rate technology allows producers to optimize fertilizer use, reducing waste.

  • Splitting applications over the growing season may offer some flexibility to take advantage of lower prices in the future or possibly skip an application.

  • Growers may choose to reduce nitrogen rates dramatically, with an eye on the Maximum Return to Nitrogen (MRTN) rates to ensure profitability.

However, improving soil health is one of the most important agronomic practices a farmer can do to increase productivity—it also delivers the best benefits when nitrogen prices are high.

Key factors in healthy soils include:

  • High surface residue

  • Little to no compaction

  • A pH 6 or higher

All these conditions promote a healthy microbial population that drives the availability of N, P and K for plants. Biostimulants, such as Generate®, help these microbes break down organic matter by boosting their ability to produce the enzymes essential to the breakdown process. Adding a biostimulant in-furrow at planting is an investment to consider to get the most of soil and fertilizer nutrients.

Don’t Let Your Nutrients Go to Waste

At Agnition, we know that every nutrient you can’t take advantage of is money wasted, so we work to create products that improve your soil health and nutrient availability. Generate is our proven biostimulant that’s helping growers cut up to 45 pounds of nitrogen per acre while improving crop health and yield!

See the benefits of Generate on your own farm. Try now with our No-Risk Trial Program!


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