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Mike Straumietis Reviews the Fertilizer Supply Chain

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Mike Straumietis, Founder and CEO of Advanced Nutrients, has written blogs that aim to educate readers about the fertilizer industry. In this blog post, he explores the global fertilizer supply chain and the various factors that affect it.

Mike Straumietis notes that it is important to know what affects fertilizer’s supply chain and distribution channels. When fertilizer is converted from raw materials to ready-for-farm-use, it is sent to retailers and sold to growers. These days, however, trucking rates have also increased with the surge in fuel prices, and, as more motorists return to the roads, the demand for gasoline has risen over pre-pandemic levels.

The Surge in Demand

The fertilizer industry has also seen a marked increase in the number of goods shipped at all stages of the supply chain worldwide, from raw to processed to consumer-ready. There is also a rising demand for products sent directly to end-users. As a result, distribution chains still recovering from the economic impact of the COVID-19 pandemic have been bogged down by heavy demand.

The rise in demand has caused shipping rates to increase as well. Thus, more workers are also needed since additional people are required to deliver products. The higher demand has also affected the fertilizer market, with the product being exported and imported worldwide.

Mike Straumietis also notes that extreme weather, manufacturing capacity changes, infrastructure breakdowns, and other logistical issues play an important role in the global fertilizer supply chain. These have affected shipping rates, and approximately 44 percent of fertilizer is exported worldwide.

The Effects of the Anti-Dumping Case

In 2018, fertilizer materials from Morocco and Russia arrived in the United States, totaling more than 2.4 million metric tons (MMT). However, after an anti-dumping case was filed against both source countries, imports decreased significantly.

Mosaic, the largest producer of phosphate in the United States, won the anti-dumping case causing phosphate imports to be slapped with a 30 percent tariff. C.F. Industries, the largest producer of UAN in the United States, took a similar case to Russia but with liquid nitrogen. In 2019, fertilizer from Morocco that came to the United States was 11 percent more expensive compared to 2018, while total fertilizer imports from Russia decreased by about 16 percent compared to the previous year.

As a result, the United States looked for fertilizer elsewhere. Ammonia and phosphate are now arriving from Australia, Egypt, Jordan, Saudi Arabia, Mexico, and Lithuania. This allows the United States to look for other imports with lower prices compared to those with applied tariffs.

The Effects of Sanctions

The European Union has also recently sanctioned both Belarus and the United States.

Belarus accounts for an estimated 20 percent of global potassium, or potash, exports, and these sanctions have slowed and even completely halted the transport of potash to both the European Union and the United States. Such sanctions have also turned countries away from purchasing from Belarus, which has led to a forced reduction in the global potash supply.

China recently banned phosphate exports because of heightened production costs and domestic use. Because China accounts for 25 percent of phosphate fertilizer exports all over the world, the ban puts even more pressure on prices. It’s also possible that China will extend its export ban to urea, which constitutes 10 percent of exports globally.

In addition to trade issues, governments of several countries have also drawn up policies that greatly affect global fertilizer prices. An example of this was when India approved an additional $3.8 billion for fertilizer subsidies for its farmers. This caused fertilizer demand in India to go up, ultimately increasing prices for global buyers even further.

Mike Straumietis and other industry observers foresee prices to remain high throughout the first half of the year, with all these factors affecting the global fertilizer industry. It is still uncertain whether farmers move away from planted acres of corn to commodities that utilize fertilizer at a lower rate, such as soybeans and wheat.

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