The past year has been tough for the fertilizer market. Limited availability has resulted in a sharp rise in prices. Delays in the supply chain also exacerbated the problems, leaving growers and suppliers in a difficult position. Russell Taylor, Vice President of Live Earth Products, says the war between Russia and Ukraine is affecting an already tense market.
“The Russian invasion of Ukraine in February 2022 exacerbated the already limited global supply of fertilizers, pushing prices to all-time highs in March,” Taylor says. “While some remedial measures have somewhat eased price pressure on US farmers, volatility in the natural gas market will likely keep fertilizer prices higher for a while.”
US growers are trying to price their fertilizer needs early for next year’s crops. However, due to the shortage of fertilizer supplies and the uncertain geopolitical climate, suppliers have increasingly switched to just-in-time pricing structures. Growers and suppliers are moving towards more formal contracts, says Taylor.
Haifa Group’s Head of Marketing for North America, Alex Ramos, says prices for water-soluble blends and plain fertilizers continue to hold steady. High energy costs in Europe and the closure of nitrogen plants in Europe are supporting nitrogen pricing, but there are some potential signs of softening in phosphorus and potassium. Ramos says it will take time to reach consumer markets if that happens.
Monitoring Horticultural Priorities on the Eve of the Budget Deadline
Supply Chain is Hard to Predict
Taylor says the supply chain in the U.S. has improved somewhat with increased inventories in the wake of the pandemic-related supply chain and production issues, and trade flow realignments following the Black Sea conflict. Despite these developments, it will be difficult to predict the availability of supply for global agricultural markets.
“Fertilizer producers expect potash trade from Russia and Belarus to remain limited by sanctions through 2022,” Taylor says. “China’s export ban on phosphate and urea shipments, which took effect a year ago, will likely continue throughout this year.”
Ramos says the nitrogen supply is limited and costs have increased significantly. Water-soluble phosphates are difficult to obtain and the quality of what is available can be affected.
“The potash supply continues to improve, but any market adjustments may be limited due to rising energy costs and transportation costs,” he says.
Greenhouse growers are looking for both nitrogen-phosphorus-potassium (NPK) mixes and straight mixes. Ramos says many growers have had to balance the use of the two because of crop availability. This remains a concern for supply availability as the majority of calcium nitrate originates in Europe.
Shipping Costs Affect Pricing
In addition to the increased energy cost effects, Ramos says transportation also increases costs. Many water-soluble products must be imported into the US for manufacturers to produce NPK blends. The rising cost of container shipments from Europe and other countries has increased the raw material costs of these blends.
“Ocean freight rates continue to be high compared to pre-COVID rates, and freight capacity is still struggling to keep up with needs,” says Ramos. “While supply to growers has improved over the past six months, there are still problems in some areas.”
He says growers are experiencing rising costs and limited supply. Product availability increased compared to the previous year, but costs increased significantly. Ramos advises growers to communicate with their supply partners about market realities and the impact this has on their nutritional needs to cope with the dynamic market.
Find Efficiency to Reduce Costs
Taylor says the fertilizer price shock has fueled interest in high-tech precision application tools that reduce the amount of fertilizer needed, as well as inputs that can add nutrients to the soil and extend the life of fertilizer without the need for natural gas during production. . Humates can also help extend fertilizer life while improving soil structure, nitrogen uptake, water holding capacity and root growth for healthier crops.
“Organic soil improvements rebuild depleted soil and increase soil fertility for the future of farming,” he says.
Suppliers learn to adapt to the volatile environment of costs and supply chain issues in order to best serve their customers.
“While there have been challenges at times, Plant Products has worked successfully with our manufacturer and logistics partners to ensure we can continue to deliver the products our customers need when they need them,” says Scott Hodgins. Market and Business Development Director.
“Over the past few years, Plant Products technical and IPM representatives have met with customers to evaluate all inputs related to management strategies and production goals,” he says.
“In some cases, these discussions have resulted in minor adjustments to clients’ management strategies in an effort to maximize the quality of their products and their return on investment overall,” says Hodgins.
One of the tools Haifa offers is NutriNet, a free online program that helps growers look at their current feeding schedules and see if they are meeting their crop needs.
“Growers should evaluate their feeding program regularly, not just when fertilizer prices rise,” says Ramos.
Ramos says growers should start to see lead times shorter as material becomes more accessible, but costs are rising and there are still problems and delays in many ports.
Fertilizer Suppliers Report High Costs, Limited Availability