The Fertilizer Institute (TFI) on July 12 released its fertilizer prices brochure, Supply & Demand, Energy Drive Global Fertilizer Prices, which was developed as a tool for better understanding the dynamics affecting fertilizer prices. Average prices paid by U.S. farmers reached the highest level on record in April of this year, TFI said, and the brochure cites global demand, increased demand for corn used in ethanol production, and natural gas prices as the primary drivers behind fertilizer prices.
“Fertilizer is a world market commodity, and being that the United States is a net importer of fertilizer, our nation’s farmers must compete against farmers from around the world for fertilizer,” said TFI President Ford B. West. “In addition, farmers in the United States planted 92.9 million acres of corn – a 19 percent increase from the 78.3 million acres planted last year – putting upward pressure on fertilizer demand and prices.”
The brochure states that world nitrogen demand grew by 14 percent, phosphate demand grew by 13 percent, and potash demand grew by 19 percent from fiscal year 2001 to 2006, with China, India, and Brazil listed as the three largest contributors to the growth in world nutrient demand.
The U.S. fertilizer market is being driven by the demand for ethanol, the brochure states. The annual capacity of the U.S. ethanol sector stood at 5.6 billion gallons in February 2007, and ethanol plants under construction are expected to add another 6.2 billion gallons of capacity. TFI said USDA statistics show U.S. ethanol production could easily reach 11 billion gallons by 2011.
U.S. ammonia production costs have risen 172 percent since 1999 due to the extreme price increase in natural gas, the brochure says. As a result, the U.S. fertilizer industry, which typically supplied 85 percent of farmers’ domestic nitrogen needs from U.S. based production during the 1990s, now relies on net nitrogen imports for half of new nitrogen supplies.
TFI is making the brochure available to its members for use at state and regional meetings with state legislatures, local councils, and others. The document can be viewed on TFI’s website at www.tfi.org.