The Rising Cost of Farming: Escalating Fertilizer Prices Create Financial Challenges for Producers | News
Over the past year, farmers have seen a relentless increase in fertilizer costs, with prices for some fertilizers increasing by as much as 300%. Record fertilizer costs have local growers expecting lower profit margins for their future yields.
Nitrogen, phosphorus and potassium are the three main nutrients that farmers use for crop production. A perfect storm of factors contributed to the sharp increase in costs for all three components.
An increase in raw material costs, coupled with the rising price of coal and natural gas that are used to make nitrogen, is one of the main factors behind the upward trend in the cost of fertilizer. China’s recent restrictions on phosphate exports and fertilizer production shutdowns in Europe and China have compounded the problem. Additionally, rising commodity prices and COVID pressure on the supply chain have further spurred price growth, according to local farmers and Orange Madison Cooperative management.
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The market price of cash crops has risen about 30% to 40% over the past year, but does not match the rising cost of fertilizers, according to the director of agronomy of the cooperative division of ‘Orange Madison, Jim Gilliam. During this time, fertilizer costs have increased by 50% to 300%.
With 419 active farms, agribusiness is one of Orange County’s largest industries and rising production costs could force many producers to adjust their operations.
“This may force some farmers to switch from one crop to another that requires fewer inputs,” says Gilliam.
Gilliam adds that some farmers might skip a year of fertilizer application if the soil still has enough nutrients built up from the previous season. He says farmers will definitely turn to alternative sources such as chicken litter and turkey litter and he expects the co-op to sell less fertilizer in the spring.
Orange Madison Co-op general manager Justin Dreckman said the co-op saw an increase in demand for fertilizer last fall from growers preparing for the 2022 season and trying to stay a step ahead. ahead of the price increase.
Cam Gibson, who grows soybeans and corn in Orange, Madison and Culpeper counties, says he’s already turned to alternative fertilizers for some of his crops.
“I’m scheduled to get some biosolids out and we’ll get out whatever turkey litter we can get,” Gibson says.
Although other sources contribute soil nutrients, he says poultry litter and biosolids won’t work as a complete fertilizer. Gibson says poultry litter is high in phosphorus but low in potassium and nitrogen.
“It’s a good accessory to add to what you put out there, but it’s by no means a complete replacement,” he says.
Gibson expects a loss of profit in 2022 compared to previous years.
“It usually takes $500 to $600 to produce an acre of corn, and this year it will be around $700 to $800, maybe even $900 depending on how much fertilizer we produce,” says -he.
Theo Haberland grows corn, soybeans and wheat in Orange and Madison counties. Haberland says he also anticipates a loss in profit this year.
“It’s a simple calculation. If the inflows are higher and the outflows stay the same, it’s a loss,” he says.
Haberland says he will have decisions to make in the months leading up to planting. It will consider application methods, changing crops, exploring alternative fertilizer sources and reducing fertilizers, he said.
One decision that is not his is the market price for the grain he produces.
“That’s the problem with agriculture; we buy everything retail and wholesale it. It’s the complete opposite of any other business model,” says Haberland.
Fixed grain prices leave producers at the mercy of the market.
Dreckman adds that as a crop grower, “you don’t have much control over what you pay, and you don’t have much control over [the price] people buy your products for.
Farmers who control the prices of their products will probably have to increase the price of their products in 2022.
Myron Neuhauser, who grows hay in Orange County for horses, cattle, sheep and goats, says he will have to raise his prices by 30% or more and that some of the high quality hay, like alfalfa, will probably double in price or not. be available.
Neuhauser says that if fertilizer costs don’t come down quickly, “American agriculture is about to change dramatically.”