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Texas A&M releases fertilizer price study

The Agricultural and Food Policy Center at Texas A&M University on Tuesday, Jan. 11, released its study of the impact of increased fertilizer prices on farms, and made suggestions about possible policies to relieve the stress.

“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. In the case of fertilizer, prices have exploded over the past year,” the report said.

Under the Food and Agricultural Policy Research Institute 2021 baseline outlook, nitrogen prices were expected to increase about 10% in 2022, but it now appears fertilizer prices will increase in excess of 80% for the 2022 planting season (relative to 2021), the new report said. The report found that the largest whole-farm impact would fall on AFPC’s feedgrain farms at an average of $128,000 per farm, and the largest per-acre impact would fall on AFPC’s rice farms at $62.04 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 report said.

The authors noted that “the farm safety net is designed primarily to address price and yield risk or a combination of the two (i.e. revenue volatility). It is not designed to account for reductions in net farm income due to increased costs of production. In other words, the farm safety net does little to provide assistance to producers in the circumstances they are currently facing. While there may be other factors at play in the case of rising fertilizer costs, COVID-induced supply chain disruptions are certainly partly to blame. Regardless of the factors driving the increase in costs, the reality on the ground – as highlighted clearly in this report – is that producers are facing the prospect of a huge increase in costs going into the 2022 spring planting season. Second, whether through the Coronavirus Food Assistance Program or the Pandemic Assistance for Producers initiative, Congress and the administration have a solid roadmap for addressing COVID-related strains in the farm economy. The situation currently facing producers would certainly seem to fit that mold.”



TARIFFS IMPACTS

The National Corn Growers Association said Tuesday that the study showed that raising tariffs on nitrogen will create shortages and cause prices to increase even more for farmers.

“As part of this study, we conducted a historical analysis going back to 1980 and found that fertilizer costs tend to go up when corn revenues increase,” lead researcher Joe Outlaw said in an NCGA news release. “Notably, these prices tend to go up exponentially even after accounting for natural gas prices and higher demand.”

NCGA said farmers are concerned about a petition by CF Industries, one of the country’s major nitrogen producers, to the U.S. International Trade Commission to impose tariffs on nitrogen fertilizers imported from Trinidad and Tobago and Russia. The Commerce Department has since released a preliminary finding recommending tariffs, despite strong outcry from farm groups, NCGA noted.

“The proposed tariffs will create shortages and drive our costs up even higher,” Iowa farmer and National Corn Growers Association President Chris Edgington said. “They will add insult to injury and impose a financial hardship on family farms.”

The study was commissioned by state corn organizations in Texas, Missouri, Colorado, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, Nebraska, New York, North Carolina, North Dakota, Ohio, South Carolina, South Dakota, Tennessee and Wisconsin.

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