What goes up must come down, as the saying goes. We certainly hope that’s the case when it comes to the rising prices of, well, just about everything lately. From February 2021 to February 2022, the Consumer Price Index rose 7.9% — the fastest price spike in 40 years. For everything from food and fuel to housing and health care, Americans are paying more. The good news for strip-tillers, of course, is that commodity prices are up, too, but unfortunately, that doesn’t automatically correspond to increased profits due to the skyrocketing costs of inputs.
According to University of Illinois ag economist Gary Schnitkey, anhydrous ammonia averaged a very reasonable $487 per ton in 2020 but has been on the rise ever since. It increased to $746 per ton in July 2021 and climbed to $1,503 per ton by Feb. 24, 2022, the day Russia invaded Ukraine. A month later, the price had inched up a bit more to $1,516 per ton, an increase of 211% since 2020.
The war matters in this context largely because Russia is “a significant producer of fertilizer ingredients, including nitrogen, accounting for 23% of ammonia exports,” Schnitkey says, adding that while the conflict has the potential to impact fertilizer prices in the future, a significant cause of current high fertilizer prices globally is actually intentional supply reductions in Europe that resulted from runaway natural gas prices there.
Glyphosate and glufosinate prices are also up due to tight supplies. This supply issue, which has pushed glyphosate prices up 3-4 fold above 2021 levels, has an interesting wrinkle, however. At the end of March 2022, the China Price Index showed that the active ingredients (AIs) glyphosate and glufosinate made in China were coming down in price. David Li with AgriBusiness Global found that glyphosate was down 16% and glufosinate was down almost 31%, due to increased inventory being made available by two Chinese firms.
I asked Aaron Locker, vice president for sales at Helm Agro, if farmers would start to see a price reduction in these popular herbicides soon, considering the falling AI costs. If you guessed the answer was probably not, you’d be correct, but maybe not for the reasons you’d expect.
“You’re right,” Locker says. “Some of these active ingredients have come down, and yet the inert ingredients that go into those formulas are still, in many cases, hard to find. We expect the supply tightness to remain all the way through the first or second quarter of 2023.”
So, while I don’t imagine input prices can stay at such elevated levels indefinitely, it appears they’re likely to be a drain on your bank account for a while.
Strip-tillers, being more attuned to using targeted inputs, are in a better position than most growers to control input costs. For a good example, see p. 14 to read about Prophetstown, Ill., strip-tiller Rock Katschnig, who talks about how strip-tilling allowed him to cut his fertilizer inputs by 30% without taking a yield hit. And read about Chris Perkins (p. 8), who gets by with just 0.57-0.63 pounds of applied N per bushel of corn with his banded fertility program.
What have you been doing in the face of rising input prices? If you’ve developed useful strategies other farmers could benefit from, let me know at jgerlach@lessitermedia.com!
