Posted on 06/04/2008 4:08:53 AM PDT by decimon
DAYTON — Corn stalks normally dominate the fields of farmer Lyle McKanna. But this summer, leafy green soybean plants will swallow up more acreage than ever.
McKanna, who farms 800 acres near Lima, has replaced more than one-fourth of his corn crop with soybeans, which require far less fertilizer.
In part because of a global surge in demand, the price of fertilizer has skyrocketed 228 percent since 2000, forcing U.S. farmers to switch crops, cut back on fertilizer or search for manure as a substitute.
Wholesalers and retailers are scrambling to find and buy fertilizer and juggle what supplies they have to meet customers' needs. Between 2001 and 2006, global demand jumped 14 percent, an amount equivalent to the entire U.S. market, according to The Fertilizer Institute, a Washington D.C.-based trade group.
"We're trying to get as much as we can and get it into storage," said Joe Dillier, plant, food, markets manager for The GROWMARK System, a farm cooperative based in Bloomington, Ill. "It's hard to buy as much as you want forward because everyone sees that this price is going to continue to go up."
The price increase means the cost of fertilizing an acre of average-yield U.S. corn rose from about $30 to $160.
Mike Duffy, professor of economics at Iowa State University who closely tracks the costs of crop production, said the more expensive fertilizer might increase the price of sweet corn this summer. And if enough farmers change over to soybeans, it could cause some localized shortages of sweet corn and increase the price of corn in grain markets.
The demand for fertilizer has been driven by an increasing world population and a growing middle class in developing nations that wants more grain-fed meat and more diverse diets. In addition, many U.S. farmers continue to use large amounts of nitrogen fertilizer on their corn because the crop's market price remains high and they feel they can still make a profit.
The stronger demand has helped raise fertilizer prices, combined with a weak dollar and soaring energy costs that make producing and transporting fertilizer more expensive.
The United States has lost more than 40 percent of its capacity to produce nitrogen fertilizer since 1999 because of the high cost of natural gas.
Hammelman Nitrate, a small, independent fertilizer retailer in Edwardsport, Ind., lost a few sales last winter because the company couldn't get supplies quickly enough for some of its customers.
"It's a big concern because you don't know whether the supply is going to be there or not," said Kevin Hammelman. "It's a big, big struggle."
Normally, Ceres Solutions, an agricultural cooperative with 26 stores around Indiana, buys fertilizer a few months before it sells it. Now it is buying nearly a year in advance to assure it can get what it needs.
"I'm already pre-ordering for next fall," added Thad Shidler of Howesville Farm Supply in Clay City, Ind. "We've never had to do that. It's always been available."
Some farmers are sticking to their traditional practices — nervously.
This year's corn plants on Bob Peterson's southern Ohio farm are getting the same amount of fertilizer they got last year. But it's costing twice as much — nearly $300 an acre.
"This is the riskiest crop I've ever planted," said Peterson, who farms 1,600 acres of corn and soybeans near Washington Court House, Ohio.
"If we get a normal yield, we will make money. But, boy, if we have a drought, reduced yields, insect problems — we'll lose a lot of money."
It costs more to fertilize corn than soybeans — about $160 per average-yield acre of corn to $120 for soybeans. And although the market price of soybeans is about $12.90 a bushel compared with $5.50 for corn, farmers usually can produce about three times the number of bushels of corn per acre than soybeans.
Vance Bauer has planted more corn this year on his 1,800-acre farm near Gowrie, Iowa, and plans to plant even more next year.
"The fertilizer inputs are high, but corn still makes more sense at today's prices," he said. "It's worth the risk."
The high price of fertilizer may have a silver lining. Karen Chapman, water and wildlife analyst for the Environmental Defense Fund, said that if U.S. farmers are using a little less fertilizer, runoff that pollutes streams and rivers could be reduced.
"We may see some benefits in water quality," Chapman said.
___
On the Net:
The Fertilizer Institute: http://www.tfi.org/
“cut back on fertilizer or search for manure as a substitute.”
Bad tomatoes?
But we have to get over our “addiction” to oil! (Which makes fertilizer for farmers, who grow food.)
Who knew?
Just take a truck to Washington DC. There's plenty there.
Or hail, or freeze, or poor germination due to low soil temps or too much rain, or..or..
I always blanche when I pay my fertilizer bills and I'm only paying 1/3 of it as an absentee landlord. When I think of the total amount paid by the tenant and myself, I really blanche.
But there are those on this forum would maintain that NOOOOO Farm Bill support for our nation's farmers should ever be passed by the legislature. Which is foolishness.
Those free market libertines don't have a ounce of common sense. One even posted on this site (paraphrasing) "who cares if the American farmer goes out of business we will buy our food wherever it's the cheapest" . Idiot poster thinks other countries like Russia and China will sell us food in a worldwide drought condition.
I have some horses who will fertilize for nothing more than the price of hay... ;)
Exactly. I don’t know if you’re familiar with the latest recent attempt to get S. Korea to actually open their border to US beef imports.
They talk and promise, promise and talk and when the date actually arrives for shipments to start, they renege due to political pressure from their own ag lobby.
It simply isn’t going to happen and as you suggest we’re foolish to think the rest of the world would export food to us without charging both arms and both legs.
Somebody needs to invent fertilizer made of solar power so we can eat “green” and feel good about ourselves.
This is a 1 yr chart for the ETF MOO, which invests in agribusiness companies, including several major fertilizer companies. I've been invested in it for awhile, and have been happy with the performance.
If I have to continually pay more for food, I figured try to find a way to make money off the rise in food prices.
...and the principal reason is that fertilizer isn't made from oil.
There are huge Tomato fields around my old homestead that are fertilized with a sprayed manure mixture a few weeks prior to planting. Stinks up the place when the wind shifts.
MAP was $220/ton now projected to go to $1200/ton next spring. Presently $800/ton.
Hey Gabz!
Check this out!
Garden Ping!!!!!
I’ve been using cow manure compost to fertilize my yard and garden. My plants grow like mad, and water usage is way down.
“If I have to continually pay more for food, I figured try to find a way to make money off the rise in food prices.”
Glad to see another investor who thinks/invests as I do. :)
The farmers around here know the score. There are 700 acres of soybean around me this season, versus sweet or field corn in other years.
FIL’s only planting field corn this year to cash in on the ethanol boondoggle; nearly $6 a bushel! Unheard of in years past.
When people we meet ask my husband what we 'do', he sometimes replies that we are professional gamblers. He will then smile and tell them that we farm. There is an awful lot of truth in the gambler statement, though.
Actually, I think that 'scared' is a term somewhat misused here, as I believe that you wouldn't farm if you were scared. You just have to be prudent and weigh all of your options harder than you might in years past.
This year we decided to plant field corn on irrigated ground, which reduced our 'usual' corn crop by 60%, but it takes the rainfall question out of the equation. We are having a smaller cotton crop this year as well, as it requires high amounts of nitrogen (not mentioned in the article). Soybeans actually fix nitrogen in the soil, so they are always a good rotation crop regardless of the market price. We have more soybeans than usual.
Thanks for the ping.
ping
So-What’s wrong with manure? Waste is something we’ll never run out of, usually cheaper, plants grow better on it (at least mine do), etc;etc. I don’t see a down side, other than the smell, but that isn’t permanent. I wish farmers could have stayed with it. I’ve put it in my front flower bed two years in a row, and everything there has come out HUGE, especially the peonies.
We have organic gardens and we compost for our fertilizer.
Animal feces needs to be composted for a while to kill the bad bacteria and, in turn, the smell.
If you use horse manure before it’s composted, it will burn your crops.
Are farmers really really bad at math? or is it the reporters and editors?
That sure looks more like 530% to me.
Well, the terminally ignorant certainly don't!
But stock in South America Bat Guano! Toot sweet...
Well, having idiot posters and voters is almost tolerable, but having idiot leadership is not.
Unfortunately, both voters and leadership might be narrowly highly educated, but scientifically total imbeciles. They are ignorant of both cause and effect, as well as of the huge, complex network of uses for oil that fuels the dynamic modern world.
Substituting nuclear power for powerplant fuel would free up a significant amount of oil and gas for other uses where hydrocarbon products can't be as easily replaced.
A distinction without a difference. The most common fertilizers are made using ammonia, and the main ingredient used to make ammonia is natural gas, a product of... you guessed it.
Look up the number of huge power plants using natural gas for "clean" fuel.
We are heading for interesting times.
The growing season started slow, and isn’t improving. In the north, Canada and Russia are worried about having to revamp their wheat operations. This is besides the fertilizer problem.
Despite what many of the idiots spout here in FR, farmers are in danger of getting wiped out. The grain prices are up, but the margins are getting tighter. You can’t contract ahead as much as you used to, and for fertilizer you often can’t at all.
But it is fun to slam farmers here. Just wait.
Natural gas is not produced from crude oil. It has traditionally been used in the manufacture of nitrogen fertilizer because it’s been cheap. It’s not necessary to the production of fertilizer, however.
You still need the fissile material. There are few sources of that in the world. Some of them are not very friendly to us, and with the green weenie laws we have right now, what domestic mining we can do is very limited.
That and you have a major problem with the spent fuel. The current authorized US designs (and in reality the French style and pebble bed designs) produce a significant amount of radioactive waste you have to find a home for. And good luck with that.
Nuclear energy is not the panacea that many think it is.
The reason NG was promoted so heavy in the 70’s and 80’s is that it was a waste gas that could be turned into a profit center.
What are the reasons for the concern about Canada and Russia, and their crop situation??
I know you weren't addressing me specifically but I wouldn't slam farmers just to do it. I can't recall slamming farmers at all. What I would do is treat farming as any other business.
Canada has had a cold, wet spring, doubtless caused by global warming. I’m not familiar with much that goes on in Russia.
I believe you’ll find that the natural gas flared from oil wells is an insignificant portion of the natural gas consumed in this country (but that the marketplace, just as it does with fertilizer management practices, will recognize and correct economic inefficiencies associated with torching)
Again, it wasn't directed at you, I am sorry that it looked that way.
And that is where the problem is really. Ammonia fertilizer is made with an electrical process and atmospeheric nitrogen (basically contained lightning, it is pretty cool), but the source of steam and power at most of the plants is natural gas. Some of the older plants might have a coal or oil burner around, but most have switched to natural gas.
The good thing about the high NG prices is a lot of old wells, coal beds, and garbage dumps are now being tapped.
Thank you Mr.Lucky, there are a lot of things that effect a crop, that most people like me don’t consider/ I hope you get some warm dry weather to get things to going..
Even a blind pig finds an occasional acorn.
Thanks for the ping.
I cross linked it.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.