What's causing the high prices and how can producers manage it?
by Kristen Lutz
“We are going into a new season, let’s stay positive,” says Ian Boxall, president and director of District 4 with Agriculture Producers Association of Saskatchewan (APAS).
After the extreme drought of last year’s growing season, western Canadian producers are ready for a fresh start. However, they are already faced with their first challenge before the snow has melted: high fertilizer prices.
With the high cost of inputs, and more focus than ever on sound environmental farming, here's an update on current best-practices for fertilizer and fertility management.
High input prices
“Fertilizer is the most important input for crops grown in Canada and around the world,” says Clyde Graham, executive vice president of Fertilizer Canada.
Due to its high demand, there are a few global supply factors that play into this year’s high fertilizer prices.
“Late in 2021, in response to a tightening supply, China banned exports of all phosphate products to prioritize their domestic use,” says Graham.
Price increases are happening across all fertilizer products, but because of the high application rate of nitrogen-based products, they will likely put the biggest dent in the producer’s budget.
“Natural gas is a key feedstock in the production of nitrogen fertilizer and, in general, makes up about 75 to 80 per cent of the cost of nitrogen fertilizer. Current forces in the natural gas market are increasing its cost,” notes Graham.
Boxall explains that Canadian fertilizer pricing is based out of New Orleans, La. “New Orleans converts the ton and the dollar and then add freight charges, and that’s what gives us our price here.”
Graham adds that 60 per cent of U.S. ammonia (or nitrogen) production occurs in Louisiana, Oklahoma and Texas.
“The February 2021 winter ice storms and Hurricane Ida significantly impacted the production of nitrogen fertilizers in this critical U.S. production region,” which can in turn increase Canadian fertilizer prices.
The final piece to this puzzle is transportation. “The biggest hurdle we are going to face here is logistics and getting the fertilizer in place to the supplier,” says Boxall.
“Fertilizers are shipped to markets in response to demand from crop producers,” explains Graham. Due to the high commodity prices we are seeing, producers are inclined to increase planted acres, buy more fertilizer and improve yields. “This increased demand for fertilizer tightens the market.”
Boxall agrees. “The Canadian market becomes its own animal after March.” By the time demand is increased because of spring seeding, the supply from production facilities has nearly run out, causing a spike in cost.
“There is not a great deal of transparency in fertilizer prices. I am not worried about short supply, but I am worried about the system getting in place for the spring,” says Boxall.
Recommendations for this year
Of course, a high-yielding field can be dependent on the co-operation of Mother Nature, but often fertilizer can aid in its success.
Fertilizer Canada encourages producers to stick to the 4R Nutrient Stewardship program.
“Right Source (of fertilizer) at the Right Rate, Right Time and the Right Place, can improve on-farm economics, crop productivity and fertilizer efficiency while at the same time benefiting the environment,” says Graham.
He continues to explain that the 4R program “helps reduce the loss of nutrients into the environment through water and air and keeps them in the soil where they are needed,” helping producers minimize their environmental impact while maximizing their economic benefit.
“With the large uptake of zero-till in Western Canada, we are following the 4Rs outlined by Fertilizer Canada,” says Boxall.
“Because of the widespread uptake of zero-till, we don’t have as much risk of runoff as they would in areas where they spread the soil. Because we are putting fertilizer in the ground at the time of seeding, and we don’t spread our soil, the fertilizer is where it needs to be.”
After the extreme drought conditions of the 2021 growing season, producers are encouraged to perform soil tests prior to fertilizer application. “I’m seeing reports of nitrogen left in the soil from last year that wasn’t utilized,” says Boxall.
Nitrogen carryover from the previous year can help reduce application this growing season.
Of course, this is dependent on location and management practices, and soil should be tested to confirm fertilizer needs.
“I have seen some samples where there is no reserve and I have seen samples where there are lots of reserves. It depends on what you grew last year and what the environmental impacts were on that land,” Boxall continues.
Snowfall from this past winter can also play into fertilizer reserves. If snow melts rather quickly prior to seeding, soils may be dry by springtime.
“At the start of seeding, if we are dry in Western Canada, you will see a reduction of fertilizer application just because of the lack of moisture; the plant can’t use it anyways,” says Boxall.
Although most producers stick to their rotations because of agriculture economics, some may choose to switch out some crops for those that are less nitrogen dependent. “There will be some guys that will change and grow crops that require less nitrogen. They might have to for the cost, they might have to for the availability – that’s the reality of it,” says Boxall.
With the high price and application rate of nitrogen-based fertilizers required for some crops, this could be a valid solution for some growers.
Lastly, speaking with a soil agronomist is always a sound decision prior to seeding and fertilizer application. Agronomists can assist in predicting potential yield and equating the correct fertilizer requirements for each crop in each field.
“By working with their agronomist, to implementing 4R Nutrient Stewardship practices on their farms, growers know they are making the best choice for the future of their land from both an environmental perspective and an economic perspective,” says Graham.
To meet fertilizer application requirements, Boxall suggests “soil sampling the land and working with your agronomist to predict this year’s yield. There is an equation to figure out the amount of fertilizer to achieve this.
“At the end of the day, the determining factor if our land is going to be high-yielding is Mother Nature – we need a little co-operation from her to ensure that. So, let’s hope for a slow snowmelt and some timely rains in the spring.
“We have good market prices and good commodities that are sought after all over the world. Let’s go into the season positive.” BF