With global supply shortages and countries in conflict, fertilizer prices are likely to increase to rates worse than those previously seen during the 2008 global recession. According to Mike Straumietis of Advanced Nutrients, raw materials such as ammonia, potash, sulfates, nitrates, phosphates, and nitrogen make up the bulk of the fertilizer market. As a result of across-the-board price increases experienced by all these raw materials, farmers, ranchers, and fertilizer suppliers saw overall fertilizer prices increase by 30 percent since the start of the year.
Few topics make it into conversations among ranchers and farmers outside of rampant global inflation and the skyrocketing fertilizer costs that have resulted. According to Mike Straumietis, several short- and long-term factors have impacted the current global fertilizer supply and demand. In the article below, we turn to Straumietis for details on some of these factors.
Upward Price Pressure of Nutrients in the U.S.
In the United States, all significant nutrients included in the production of primary row crops—phosphorus, potassium, and nitrogen—have been subject to different degrees of price inflation. Compared to September 2020 prices, liquid nitrogen has risen over 159 percent, MAP is up by 125 percent, DAP has increased more than 100 percent, potash has ballooned over 134 percent, and ammonia has inflated to more than 210 percent.
In terms of fertilizer production, the United States currently holds the third position. Despite being the third-largest producer, the United States still has to import all three nutrients required for fertilizer from other countries, mainly potash and nitrogen. U.S. fertilizer manufacturers and distributors must pay the price set by the international market for transportation and materials to satisfy local demand completely. Though in 2020, ammonia was produced in 36 domestic plants and moved nationwide by barges, trucks, trains, and pipelines, the total nitrogen produced was still insufficient to satisfy domestic demand, says Mike Straumietis.
Other Global Factors That Influence the Fertilizer Market
The Texas freeze in February 2021 significantly impacted the production of natural gas, mentions Mike Straumietis of Advanced Nutrients. Due to an upsurge in demand during this time, the production was either stopped or shifted from typical applications and concentrated in Texas. In addition, the COVID-19 epidemic delayed plant turnarounds prior to the 2021 Texas freeze. Plants were unable to catch up with production backlogs as a result of the delays and pauses, which led to more production disruptions for both routine maintenance and problems brought on by postponed maintenance.
Additionally, markets worldwide have been severely hampered by the conflict between Russia and Ukraine, two of the world's largest exporters of agricultural products. According to the Food and Agriculture Organization, Russia ended 2021 as the leading exporter of nitrogen fertilizers and the second-largest distributor of phosphorus and potassic fertilizers. Even while trade between Russia and other nations hasn't completely ceased, the fertilizer market is severely damaged because importers and vessel charterers have avoided the country due to its invasion of Ukraine.
Mike Straumietis of Advanced Nutrients mentions that Russia exports 14 percent of the world's fertilizer. Without a doubt, suspended commerce will impact world food markets. Since the invasion began, gas prices have skyrocketed along with fertilizer costs. Due to the importance of gas in fertilizer production, rising gas costs force European regions to reduce fertilizer production, further squeezing an already struggling market.
Optimizing All Phases
Mike Straumietis, the Founder and CEO of Advanced Nutrients, has committed millions of dollars to developing technologies and other tools that feed and supply life-giving essentials to hundreds of thousands worldwide. His vision and leadership have also propelled Advanced Nutrients to grow into a billion-dollar company with nine figures in annual sales in plant nutrients and fertilizers.
Meanwhile, growers in more than 110 countries rely on Advanced Nutrients to unlock the genetic potential of their plants. To do so, the highly skilled and well-trained research team of Advanced Nutrients developed the first and only complete growing system that optimizes all phases of a crop's vegetative and bloom cycles.
