Those who claim that the rapid increase in fertilizer prices defies rational explanation and want an investigation by the federal government don’t fully understand what’s going on in the world markets, according to The Fertilizer Institute (TFI).
“The rational explanation for the price the world’s farmers are paying today for fertilizers is the tremendous global demand push caused by increasing food demands,” said TFI President Ford B. West. “Fertilizers are currently responsible for between 40 and 60 percent of the world’s food supply, and U.S. farmers are competing with farmers from around the world.”
West’s response to a front-page article in the Wall Street Journal was part of TFI’s “outreach” after questions were raised on other fronts, including the New York Times and an appeal from the North Dakota Farmers Union (NDFU) to its senator in Washington urging an investigation by the Federal Trade Commission (GM June 2, p. 15). NDFU is upset over fertilizer prices showing a 65 percent increase since April 2007.
West emphasizes that U.S. farmers are particularly vulnerable to world changes because this country imports 90 percent of its potash and 55 percent of its nitrogen. “Since just 2001 the world demand for fertilizers grew by 14 percent, which is the equivalent to the total size of the U.S. market,” he reported. “The already tight supply situation was recently further squeezed when China, the world’s largest exporter of nitrogen and phosphate, implemented export tariffs ranging from 100 to 135 percent to keep its fertilizer at home and out of the world’s marketplace.”
TFI spokeswoman Kathy Mathers told Green Markets the organization also has reached out to NDFU President Robert Carlson, as well as to all of the members of the North Dakota congressional delegation, calling their attention to the “supply and demand factors” influencing fertilizer prices, including higher demand worldwide; the U.S. ethanol boom, which is pushing prices upward; increased transportation costs; the declining value of the U.S. dollar, which increases the cost of imported goods; and higher natural gas prices in the U.S., which lead to higher fertilizer production costs and increased fertilizer costs.
In addition to the high profile stories appearing in the Wall Street Journal and the New York Times, local media were also running plenty of stories on the high price of fertilizer. One Indiana news source noted that fertilizer prices have climbed 228 percent since 2000, while global demand jumped 14 percent from 2001 to 2006, pushing the cost of fertilizing an acre of average-yield U.S. corn from about $30 to $160.