High fertilizer costs temper farm optimism

Many farmers I’ve visited with over the last couple of weeks are happy to see commodity prices staying relatively high and are excited about replacing some outdated equipment. But that bullishness heading into 2022 is tempered by what they’ve been paying for inputs, especially fertilizer.

The cost of fertilizer exploded in 2021, and farmers across the country are going to be hit even harder in 2022, according to a new study by Texas A&M University’s Agricultural and Food Policy Center.

“As the nation struggles to recover from the COVID-19 pandemic, a number of supply chain disruptions continue to wreak havoc on agricultural input markets, both in terms of availability and cost of inputs,” the researchers wrote in the study that evaluated the potential impact on various types and sizes of farms.

Fertilizer costs will be as much as 80% higher than last year for this year’s planting season, the study said.

The study is based on data for 64 representative farms that A&M economists regularly use to evaluate the impact of policy and economic changes. The study found that the average feed grain operation would pay $128,000 more on fertilizer in 2022, an increase of $39.55 per acre.

Rice growers would see the biggest cost increase on a per-acre basis with the increase coming to $62.04 per acre, according to the study. An average cotton farm will pay about $114,000 more this year, or $29.72 per acre.

“Given the farm safety net is not designed to address rapidly rising costs of production, there are growing concerns in the countryside about the need for additional assistance,” the researchers said. “Recent fertilizer price increases across all three primary nutrients have caused significant concern among producers. For the 2022 crop, producers are experiencing sticker shock as well as product shortages.”

National Corn Growers Association President Chris Edgington told Agri-Pulse farmers will likely use less fertilizer this year and yields could be lower, hurting profitability. “Our fertilizer bill has more than doubled," said Edgington, who farms about 4,000 acres with his family in northern Iowa.

Edgington and the NCGA have been particularly concerned about tariffs on foreign fertilizer, like the ones that have effectively stopped U.S. imports of phosphate fertilizer from Morocco and Russia. Furthermore, the Biden administration is scheduled to begin hitting potash fertilizer from Belarus with sanctions in late April.

“Morocco and Russia represent 15 to 20% of our domestic fertilizer demand and if you take that out of the market, prices go up,” Edgington said.

On the energy front, the Energy Information Administration notes in their most recent short-term outlook that natural gas prices have come down a bit but gasoline and diesel prices are also likely to be a bit higher this yar.

United States regular gasoline retail prices averaged $3.02 per gallon in 2021, compared with an average of $2.18 per gallon in 2020.

“We forecast gasoline prices will average $3.06 per gallon in 2022 and $2.81 per gallon in 2023. U.S. diesel fuel prices averaged $3.29 per gallon in 2021, compared with $2.56 per gallon in 2020, and we forecast diesel prices will average $3.33per gallon in 2022 and $3.27 per gallon in 2023,” according to EIA.

Editor’s note: Sara Wyant can be reached at www.agri-pulse.com. Agri-Pulse Associate Editor Bill Tomson contributed to this report.