More than 600 fertilizer industry participants gathered in San Diego on Feb. 11-14 for The Fertilizer Institute’s (TFI) 2018 Annual Meeting. Chuck Magro, president and CEO of Nutrien, talked of “more optimism” in the fertilizer sector as the 2018 spring season approaches, an attitude that was echoed by other attendees.
“We’ll see how spring unfolds, but so far so good,” Magro told conference-goers at the event’s opening day breakfast session.
Several industry contacts said urea supply dominated discussions at the event. While the phosphate market was generally described as balanced-to-tight at the outset of the spring season, sources described the domestic urea market as short by some 1.2 to 1.5 million tons due to multiple plant outages and reduced import volumes. One attendee said this deficit would ordinarily create a “panic” just weeks before the start of the application season, but that was not the mood in San Diego, due primarily to lingering uncertainties about spring demand.
There were reports from some in attendance that corn acreage in the U.S. could drop to as low as 82 million acres this year, significantly impacting fertilizer volumes. Others said worsening drought in the Southern Plains will slash wheat topdress volumes, and could result in a missed wheat season entirely if rain doesn’t come to the Wheat Belt in the near-term.
“Farmers and retailers don’t believe there’s a shortage of nitrogen,” said one industry contact at the conference. “But there’s no question that drought is impacting demand.”
At the conference podium, the event featured a panel discussion that addressed the views of retailers and growers on a range of issues impacting the industry. Brent McGowan, vice president of operations for Wilbur-Ellis Co., said the industry is seeing greater use of 4R nutrient management strategies in the field, but low crop prices and thin margins are creating headwinds for further adoption.
Grant Strom, an Illinois farmer and 2017 4R Advocate, said it’s easy to see the benefits of split applications and variable rate technology in some years, but not in others. He said 4R technology requires some capital costs up front, but there is a clear economic return over time, noting that his business has lowered its fertilizer costs as a result of grid sampling, seed technology, and more efficient fertilizer use.
“I don’t think the goal of the 4Rs is to create an economic benefit on a year-to-year basis,” added McGowan. “It’s about awareness, and doing the right thing for the right reasons. It’s about the sustainability of the crop cycle and farmland over the course of time.” McGowan said the goal for retailers will be to better define their role as these new technologies emerge.
McGowan and Strom also discussed the Farmers Business Network (FBN) e-commerce platform. Strom said he likes the transparency that FBN provides, and thinks the sales model will “really shake things up” in seed and crop protection sales, but less so in fertilizer. He also called out the ag retail industry, saying farmers who are buying a lot through FBN “need to find a better retailer.”
McGowan said FBN is disrupting the retail industry, but that isn’t necessarily a bad thing. The goal for retailers, he said, is to find a way to “create simple and intuitive tools to deal with complex agronomy issues.”
The conference also featured Andrew Winston, author of Green to Gold and The Big Pivot, who discussed the mega-trends driving agriculture and industry. These include demographic and social change; a shift in global economic power from the West to the East; rapid urbanization; climate change and resource scarcity; rapidly advancing technology; and a global focus on health and well-being. He said managing these mega-trends is critical for business success.
Winston said agriculture is at the center of the renewable energy and sustainability debates, noting that farming is responsible for 24 percent of greenhouse gas emissions (GHG) and is the single largest user of water. He said climate change is creating the most extreme storms in modern history, and is a systemic risk to the global economy.
The rise of the “clean label” movement is nothing more than “de-facto regulation,” he said, stressing that “corporate social responsibility makes good business sense.” He urged attendees to develop and tell their own sustainability stories, and to help customers with theirs.
“It’s no longer simply about building shareholder value,” he said. “Companies now serve a social purpose, and having a purpose sells really well. This is not Greenpeace, it’s just green, and it saves money.”
TFI President Chris Jahn also highlighted some of the fertilizer industry’s recent successes in these areas, noting advances in water recycling, GHG capture, and industry safety.