High Fertilizer Prices Produce Uncertainty, Higher Meat Costs

June 1, 2022, 8 a.m. ·

Farmer Nathan Dorn stands on his planter (Photo by Fred Knapp, Nebraska Public Media News)
Farmer Nathan Dorn stands on his planter (Photo by Fred Knapp, Nebraska Public Media News)

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High prices for fertilizer are producing uncertainty for farmers, and pointing to higher meat prices for consumers.

Climb into the cab of a big yellow tractor behind Nathan Dorn, and you’re ready to ride like a farmer. As tractor starts moving, you notice Dorn’s hands aren’t on the wheel.

“We have a GPS dome on the top and that tells us where we are. The GPS dome knows where the GPS monitor is, and then it knows how far behind us the planter is,” Dorn explains. “I don’t have to steer. I got the auto-steer turned on here.“

People may be getting used to tractors steering themselves. But rising costs for fertilizer means farmers have to be hands-on in making decisions about the future.

The price of some fertilizer Dorn uses has nearly doubled in the last year. Jay Rempe, chief economist for the Nebraska Farm Bureau, says the run up started with February, 2021’s polar vortex. That’s when bitter cold temperatures hit Texas and Louisiana, a big source of the natural gas used to produce fertilizer.

“It was kind of a double-edged sword there, because not only did the production shut down, but the demand for natural gas spiked for use for heating. And so a lot of fertilizer companies decided ‘Hey, we can make more money selling our natural gas contracts out rather than producing fertilizer,” Rempe said.

In addition, Russia is a big producer of fertilizer, and its invasion of Ukraine and subsequent disruptions have added pressure on prices. Dorn said he bought most of the fertilizer he’s using no last fall, so up to now, he hasn’t had to pay the new high prices.

“The doubled prices are going to affect me next year. they’re going to affect me this fall, when I’m making decisions for ‘Do I want to plant corn or soybeans?’” he said.

On this gray morning, Dor is planting soybeans he won’t fertilize. But he said even with high fertilizer prices, it’s still worth it to fertilize and grow corn, too.

“I can look at the price of fertilizer and say ‘Well, yeah, that really sucks,’he said. “Fertilizer’s doubled over the last year. But also my corn is worth 90 percent more than it was a year ago.”

Dorn said the high prices are helping farmers foot the bill for costly inputs.

“It is a lot of fun delivering corn to the ethanol plant at $8 (per bushel) and getting these huge checks. And you’re like ‘Oh man, I can pay of lot of bills.’ My banker’s making a lot of money right now, is how that feels to me,” he said.

And Dorn says Russia’s invasion of Ukraine is has him thinking about adding a new crop: wheat. Ukraine and Russia together produce about a quarter of the world’s wheat. But the war has cut into that supply.

“With the conflict that’s happening in Ukraine between Ukraine and Russia, world wheat stocks are getting incredibly tight, and so is there going to be an incentive for me this fall to plant a hundred or two hundred of wheat to take advantage of some of that economic

uncertainty?” he asked.

Wheat has gone from $8 a bushel to around $12 since the Russian invasion.

So what does all this uncertainty for farmers mean for the rest of us?

Economist Rempe says higher prices for grains that are used to feed animals means people shouldn’t expect lower prices for beef, pork or poultry anytime soon.

“I would expect higher prices for those meat products in the future just because of the costs. You have the higher fertilizer that contributes higher costs and the higher corn prices and it just kind of all compounds on itself. And so you’re going to see food prices stay pretty sticky over the foreseeable future,” he said.