Landscape Management, February 2011

NEWSVIEWS GREEN INDUSTRY EVENTS TRENDS AND TIPS GREEN INDUSTRY EVENTS TRENDS AND TIPS LANDSCAPEMANAGEMENT NET FEBRUARY 2011 8 PHOTO BY ISTOCK INTERNATIONAL INC To subscribe to TurfTips go to https lists purdue edu mailman listinfo turftips F ertilizer prices are rising again This from Bruce Erickson Ph D Purdue University in his latest TurfTip e newsletter Here he details his ndings Why so high Fertilizer prices are on the upswing again buoyed by the high prices of agricultural products that have stimulated increased demand While the general U S economy struggles to recover from the nancial crisis of 2008 the demand for agricultural products continues in a strong position due to favorable exchange rates grain usage for biofuels production concerns related to recent unfavorable weather in key crop growing regions and a host of other factors Higher fertilizer prices have put heavy users such as farmers lawn care companies and golf course superintendents on the defensive trying to best manage the input costs of their businesses The following explains some factors that in uence fertilizer prices and possible strategies in dealing with high and uctuating prices Prices In uenced by World Markets and Energy Fertilizer prices reached record levels in 2008 just prior to the nancial crisis with the prices of some key fertilizer materials such as anhydrous ammonia and diammonium phosphate exceeding 1000 per ton Prices retreated in 2009 and 2010 but began increasing again last fall The price of urea is approximately twice what it was a decade ago In the 1980s the U S was a signi cant nitrogen exporter now more than 57 of nitrogen used in the U S is imported 2008 data Most commercial nitrogen fertilizers originate from a process that uses natural gas to convert the nitrogen gas in the air into a form usable by crops Natural gas prices in other parts of the world are a fraction of what they are in the U S so it is often more economical to produce there even considering transportation costs Trinidad and Tobago Canada Russia and the Middle East are major suppliers to the U S Phosphorus P and Potassium K fertilizer sources such as DAP Diammonium phosphate 18 46 0 and muriate of potash 0 0 60 originate mostly from open or underground mines with the bulk of production controlled by a handful of companies The U S is the worlds leading supplier exporter of phosphorus fertilizers but imports most of its potassium from Canada Investments in fertilizer mining and manufacturing are often long term commitments and companies often lack the ability to adjust quickly to short term market conditions Fertilizer pricing is complex Fertilizer is not traded on a common exchange like stocks currencies or grains so it can be much more dif cult to get a read on prices In addition fertilizers are heavy bulky commodities and their transport involves expense time and logistical constraints Many customers also depend on their suppliers for fertilizer storage and specialized application equipment So the market is not as uid as many other inputs users arent as likely to shop around and then just go pick up what they need as they might for chemicals or seeds Dealing with high fertilizer prices Using the correct form and amount of fertilizer to achieve the desired plant response maximizes ef cient input use and keeping costs in check Fertilizer suppliers may be willing to enter into contractual arrangements with their larger customers that specify a future quantity and price to help them manage their own price risk as well as that of their customers In addition some larger fertilizer users have also built their own bulk storage facilities that allow them to capitalize on seasonal price advantages or other price trends For more information on fertilizer pricing check out Illinois Production Costs Report Illinois Department of Agriculture http www ams usda gov mnreports gx_ gr210 txt Agricultural Prices United States Department of Agriculture http usda mannlib cornell edu MannUsda viewDocumentInfo do documentID 1002 Factors Shaping Price and Availability of the Fertilizer Market Purdue Agricultural Economics http www agecon purdue edu news nancial Fertilizer_ Market pdf Fertilizer prices on the rise heres why