A new study from Texas A&M found the price of anhydrous ammonia fertilizer has increased an average $688 per ton over the course of last year. But Dr. Joe Outlaw, Director of the Agriculture and Food Policy Center, says it’s not caused by energy costs.
“There’s a significant break between natural gas prices since basically 2010. That’s firstly, so any thought that higher gas prices are driving these fertilizer costs is not valid.”
Instead, he says fertilizer prices have been moving more closely with the price of corn, suggesting the fertilizer companies have been setting prices with profits in mind, rather than supply and demand.
“Most of what we’re using fertilizer for this country has been going down over time there’s variability there for sure, but has been going down over time. And it doesn’t really wouldn’t really support the argument that there was more fertilizer going out. There’ll be some people that might say that higher prices, drive producers to use more fertilizer and frankly, my answer to that is that as an economist, the price of fertilizer is such that they’re not going to be using it as a recreational type thing.”
Further complicating the situation is a proposal from the US International Trade Commission to put tariffs on nitrogen fertilizer from Russia, Trinidad and Tobago.
Dr. Outlaw says the tariff would raise prices by the full amount of the tax, multiplied by the pre-tax price.
“In this particular case, we’re talking about tariffs on two countries. Actually, the marginal cost is of the higher so it’d be 10% and 10% of the most recent price, which would lead to roughly $102 additional on top of what i just said, which is about a $600 price increase that we’ve seen, or price that we’ve seen.”
Jay Shuke, a Missouri farmer, already paid $1,282 per ton for his 2022 nitrogen fertilizer a 168% increase over last year. He calls the proposed tariff ridiculous.
“If the other come if the country’s exporting nitrogen into the United States, what’s causing them an economic detriment? I could understand the tariff, but I very seriously doubt that they are suffering an economic detriment. The American farmer certainly is and this is going to spill over into the consumer market as well.”
On a call with reporters, the National Corn Growers Association said they are in preliminary discussions with the major fertilizer companies, but so far none have shown any interest in dropping the requested tariffs.
Related:
Fertilizer Institute talks on US Domestic Production of Fertilizer
Mosaic aiming to keep fertilizer prices “rational”
TX Farm Bureau on rising fertilizer prices and input costs