The world is seeing a surge in fertilizer prices, and understanding why this is happening can help growers and farmers create a plan that best serves their needs. In this blog post, Mike Straumietis discusses the various factors contributing to rising fertilizer costs worldwide.
Record-High Input Costs
Various materials are involved in the production of fertilizers. Some of the most common nutrients that are used as fertilizers are nitrogen, phosphorus, and potassium. Recently, all three of them have become much harder to acquire for different reasons.
High energy costs have made it more expensive to source and process the three. For instance, natural gas in the U.S. and Europe has become more expensive in recent years. The cost of producing the raw materials needed to create fertilizers is a record high.
Some nitrogen plants in the E.U. have even been forced to close due to the skyrocketing natural gas prices. A typical facility for producing nitrogen needed for fertilizers costs approximately $3 to $5 billion on average and takes around three to five years to construct.
Mike Straumietis also notes that coal prices in China have risen, resulting in fluctuating electricity usage and forced decreases in the production of fertilizers. With the country’s decision to implement a quota on fertilizer exports, there has been a diminished supply of fertilizers on the market. In addition to this, the raw materials that constitute the fertilizer market have become 30 percent more expensive since 2022.
Mike Straumietis also realizes supply disruptions have made it costlier to produce fertilizers. Russia, Belarus, and China are major exporters of fertilizer raw materials.
As reported, Russia is currently at war with Ukraine and has been on the receiving end of sanctions for its actions in the region. For coming to the aid of Russia, Belarus has also been penalized by the world’s superpowers.
Incidentally, Russia and Belarus are two of only three countries that make up two-thirds of the world’s potassium reserves. While actual trades with the two nations are still ongoing, Mike Straumietis says that the recent happenings have led to higher acquisition costs of potash. There have also been delays in deliveries because of the ongoing conflict in the area.
In addition, the U.N. Food and Agricultural Organization stated in 2021 that Russia was the world’s top exporter of nitrogen fertilizers and the second-largest supplier of phosphoric fertilizers. So, it is not surprising that the ongoing conflict in Europe has deeply impacted the supply of fertilizers worldwide, as emphasized by Mike Straumietis.
It should also be noted that the pandemic has contributed significantly to the disruption of the supply of fertilizers. Manufacturing plants have had to adjust to the absence of workers and implement health and safety precautions to protect employees from COVID-19. The global workforce disruption has slowed production and delayed plant turnarounds.
Other Issues with Production
Mike Straumietis also remarks that other, lesser-known, issues can induce cost fluctuations in fertilizer production. For example, converting phosphate rock from its raw material to the final form for use as fertilizer requires a process called surface mining. Removing the soil and rock covering the phosphate necessitates huge draglines that measure as high as five floors. Dragline equipment is very expensive and part of why fertilizer nutrients are becoming more expensive to generate.
Assisting Growers Everywhere
Mike Straumietis is the Founder and CEO of Advanced Nutrients. He and his team of high-level and well-trained scientists have helped growers in over 110 countries unlock their plants’ genetic potential.
Advanced Nutrients has developed a broad spectrum of next-generation products that deliver the required nourishment to plants in every phase of their crop’s cycle, from seed to senescence. Through the leadership of Mike Straumietis, the company has emerged as one of the industry’s most trusted sources for plant nutrients and fertilizers.