U.S. agriculture production costs are increasingly important to the near- and long-term viability of U.S. farms. Fertilizer prices are the issue top of mind for farmers heading into 2022 since fertilizer costs account for approximately 15% of total cash costs in the U.S. All major crop production nutrients have experienced increased prices when compared to September 2020: ammonia has increased over 210%; liquid nitrogen has increased over 159%; urea is up 155%; MAP has increased 125%; DAP is up over 100%; and potash has risen above 134. Expect these cost to go up even more. Many farmers will use less which would reduce yields and raise prices. I think inflation going through the roof. Also will the Fed have the stomach to raise interest rates in the middle of this crisis. The Russians will suffer from the sanctions but so will everyone else.
I wish I could contract fertilizers at your numbers.
Nitrogen based products were up 3X and most phosphorus and potash prices were at or near double before the Ukraine invasion ever started. The prices are ridiculous and are targets of opportunity for gouging. There is plenty of all of it.
Nitrogen products are petroleum byproducts so as soon as our fearful leader trashed US production, the fear mongers raised the red flag and prices started going up. Everything else goes with it. Much like soybean prices drop a buck every time a mouse farts in Brazil and some idiot translates it into a devastating wind storm.
Transportation is one of the reasons as well. There is enough supply, getting it to me has been and will be an issue.
You do, and will continue to see prices rise as commodities are correcting. As is what happens every time there is a significant uptick in commodities, every person with a seed or a part for a machine in his hand wants a bigger piece of the “big money” the farmers is getting. Tractors, irrigation, new construction, etc, are all up 15% or more. Funny how those prices never settle back when the market drops.
There isn’t a farmer I know, and I know many across the country, that is willing to cut back on amounts used. Technology (we won’t even get into its cost increase) has brought us to the razor edge of minimum rate to yield ratios as it is with precision ag and variable rate tech. Cutting anything would drop our price per unit much more than our cost per unit at this point.
Sorry if that seemed like a rant but my point is that our government will have you believe this is all because of this war along with a ton of other problems that existed prior to the build up at the Ukrainian border.
They need to blame someone for their incompetence.
We will still keep everyone fed.