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As the value of their harvested grain tumbles, farmers are facing soaring fertilizer prices.
Fertilizer prices have jumped between 50 percent and 100 percent from last year, according to agriculture economists. The increases are squeezing farmers, whose grain prices have been slashed nearly in half in less than four months.
Corn and soybean prices have faltered as fears mounted about the global economic crisis. As a result, Indiana grain elevators were buying bushels of corn for $1.75 less last week than they were three weeks earlier. That represented a nearly 33 percent price drop.
Although steep fertilizer prices are frustrating farmers, they are benefiting soil testing and agronomy companies that help farmers minimize their fertilizer expenses. The price hikes are encouraging farmers to invest in farming methods that conserve fertilizer.
Farmers are weighing the least expensive way to replenish the soil’s nutrients while they harvest this fall’s corn and soybean crops. Many farmers will fertilize fields after this year’s crop is harvested, and they are anticipating high costs. Farmers are paying about $1,250 a ton for anhydrous ammonia – a fertilizer used to grow corn – said Woodburn resident Mark Roemke, who farms 3,800 acres with his brother and a neighbor.
“It’s affecting us big time,” he said.
Roemke and his partners saved by buying fertilizer last spring, but farms buying it now are facing higher prices. More farmers worldwide planted grain in the last year to take advantage of high prices, said Bruce Erickson, director of cropping systems management at Purdue University’s agricultural economics department. That left farmers competing for limited fertilizer supplies, causing some prices to double.
Those fertilizer prices might not be sustainable because corn and soybean futures prices have dropped nearly 50 percent since late June, said Chris Hurt, a Purdue University agricultural economist. Purdue is projecting corn farmers will need to earn nearly $5 a bushel next year to cover rising fertilizer costs and other expenses. Indiana corn farmers were receiving less than $4 a bushel at grain elevators last week, according to The Associated Press. Although $3.56 a bushel – the going price Wednesday – would have been considered a strong price two years ago, Hurt said it no longer is enough to cover corn farmers rising costs.
Farmers will likely pay between 25 percent and 150 percent more to fertilize next year’s crop, Hurt said. Fertilizers containing potassium nutrients are projected to rise the most – between 75 percent and 150 percent. Soaring fertilizer and seed prices are likely to be the fastest rising farm costs.
If grain prices do not recover, Hurt said farmers could cut back on fertilizer use.
“In essence, if the farmers of the world can’t pay the prices, they will probably cut their fertilizer demand,” he said.
Fertilizer prices have dipped in recent weeks, but Erickson said grain prices are falling faster. That trend has farmers looking for ways to cut their fertilizer budgets.
Some area farmers are taking additional soil samples to determine how much fertilizer their fields need. Farmers who used to test one sample every 10 or 20 acres are taking soil samples every 2.5 acres, said Randall Warden, director of client services for A&L Great Lakes Laboratories Inc. The Fort Wayne-based company tests soil samples primarily for Midwest farms.
A&L Great Lakes Laboratories’ agricultural soil-testing business has grown more than 10 percent each of the past two years, Warden said. The company hired about 25 seasonal workers this fall to help its full-time staff of 43 analyze soil samples. The soil analysis helps farmers see what nutrients already are in the soil and which nutrients need to be replaced, Warden said. The testing helps farmers find a balance between getting crops the proper nutrients and spending too much on fertilizer.
“Farmers are business people,” he said, “and they need more information.”
A&L Great Lakes Laboratories charges between $7.60 and $17 to analyze a soil sample, Warden said. The higher price includes an analysis of the soil’s micro-nutrients.
Farmers can use the soil analysis and other technology, including global positioning systems, to map their fields. Computer maps can show the varying nutrients in a field’s soil. Farmers use the information to apply the precise amount of fertilizer needed in each spot.
Farmers invest in soil testing and these mapping techniques to conserve fertilizer and increase their harvest yields, Erickson said. The tests have helped some farmers reduce their fertilizer budgets, but they only realized moderate savings, he said. The yield gains also remain relatively small.
Roemke, the Woodburn farmer, has used this fertilizer-spreading technique for six or seven years.
More farmers are adopting the technology to keep their fertilizer costs under control, he said.
Farm supply dealers are rushing to meet that need. About 65 percent of Midwest farm supply dealers are offering soil sampling using global positioning system technology this year, according to a survey conducted by Purdue’s Center for Food and Agricultural Business and CropLife Magazine. About 40 percent of Midwest farm supply dealers had that service available in 1997.
The Andersons Inc., a Maumee, Ohio-based farm supply dealer, expects its soil-sampling business at its Waterloo location to grow about 10 percent this year, said Greg Myers, a certified crop adviser. Farmers want more soil samples tested to ensure fertilizer is applied only where it is needed. Some farmers could skip fertilizing fields that have enough nutrients in the soil.
“It’s more important now than ever to put the dollars where they need to be placed with high fertilizer prices,” he said. jglenn@jg.net
