Report analyzes record fertilizer prices – The Gilmer Mirror

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Farmers and economists are wrestling with how to rein in record fertilizer prices heading into the 2022 crop year, and a new report compiled by Texas A&M University Agriculture and Food Policy Center suggests that prices may not increase due to several factors.

Fertilizer prices have reached record highs and a new report from the Center for Agriculture and Food Policy at Texas A&M University indicates that they could rise much more in 2022. (Photo Texas A&M AgriLife Marketing and Communications by Blair Fannin)

Joe Outlaw, Ph.D., Co-Director of the Center for Agriculture and Food Policy and Texas A&M AgriLife Extension Service economist, told farmers at the Blackland Income Growth Conference in Waco that fertilizer prices could soar as much as 80% this year as supply and demand grow at levels never seen before.

A recently completed PSAC report, which analyzed the economic impacts of rising fertilizer prices on 64 representative farms, was compiled from a study originally commissioned by U.S. Representative Julia Letlow, R-La. Outlaw said growers were not just experiencing sticker shock, but could see product shortages.

“Coupled with the current COVID supply chain issues, this will further strain the production environment for agriculture across the country,” Outlaw said.

The fertilizer report is the latest in a series of analyzes from PSAC, which has previously published impact reports on supply disruptions to the American cattle market and proposed inheritance tax legislation.

Soaring fertilizer prices

The PSAC report found that as the country continues to maneuver through supply chain disruptions and the availability of agricultural inputs, there are impacts on both fertilizer availability and agricultural inputs. costs. Last August, the Missouri Food and Agricultural Policy Research Institute projected only a 10% increase in fertilizer prices in its forecast model, but recent spot prices have forecasts reaching up to 80% more for the 2022 planting season.

Anhydrous ammonia has increased to $688 per ton or $86,000 per 1,000 acre PSAC representative farm through October 2021. PSAC representative farms are located across the country and are used to calculate and project potential implications on future production.

A man, Joe Outlaw, visits a young woman, Kaitlynn Hughes, while her parents watch in a crowded room
Joe Outlaw, Ph.D., co-director of the Center for Agriculture and Food Policy at Texas A&M University and an economist with the Texas A&M AgriLife Extension Service, visits Kaitlynn Hughes, a Royse City High School scholar and her family at Blackland Income Growth Conference in Waco. (Texas A&M AgriLife photo by Blair Fannin)

“The current agricultural safety net is not designed to deal with these types of rapid increases in production costs, which will continue to be a growing concern for farmers across the country, creating an emerging need for assistance. “, said Outlaw.

The report found that the largest whole-farm impact would be on PSAC feed grain farms at an average of $128,000 per farm and the largest impact per acre would be on farms of PSAC rice at $62.04 per acre.

PSAC economists went back to the 1980s, finding that fertilizer prices generally tend to rise as corn revenues rise.

Grain market, implications for production

Jason Johnson, Ph.D., an economist with AgriLife Extension, Stephenville, told the Blacklands Income Growth conference that grain farmers really need to budget for crops for 2022.

Grain growers will not only face record high fertilizer prices, but also price support pressure from carryover grain stocks and drought in some of the key wheat producing areas.

“If fertilizer prices increase, how can you (as a farmer) reduce costs? Johnson said. “Make sure you don’t waste fertilizer and be very strategic in planning your crop management.”

With higher fertilizer prices, Johnson said farmers will need to be increasingly careful with their crop production budgets. He also suggested that to cope with inflation, grain farmers should consider putting some of their money to work, such as pre-purchasing input needs.

“Also, when was the last time you had a rising interest rate environment?” says Johnson. “What about going through four interest rate hikes in one year? Have you financed something with a variable interest rate? 2022 is going to be an environment of rising rates. How will this affect your operation and your bottom line? »

He said farmers can counter by locking in future contracts by selling part of their harvest throughout the year.

“Assess your cost exposure,” Johnson said. “Look at what your costs are going to be versus the relative profit. The crop budget forecast can be used to your advantage.

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