Why the Fertilizer Price Increases?

Anna Stoops, Extension Ag Agent, New Castle Co.; stoops@udel.edu

We’ve all heard about it by now – the rise in the cost of fertilizer and how it is impacting everything from the food we eat, to the clothes we wear, to the fuel we put in our equipment and vehicles. But, what is causing fertilizer prices to skyrocket?

The answer in part, is simple economics – supply and demand. According to an article by The Fertilizer Institute (www.tfi.org), global demand for fertilizer has increased anywhere from 14 to 19 percent from 2001 to 2006. Some of this additional demand is coming from developing countries, in particular India, China and Brazil, where people are increasing their food consumption as their incomes increase. The production of ethanol is also impacting fertilizer demand and price. The U.S. Department of Agriculture predicts that by the year 2011, U.S. ethanol production could reach 11 billion gallons, up from the February 2007 volume of 5.6 billion gallons. Corn production uses 43% of the U.S. nutrient demands and this is placing significant pressures on the economics of not only fertilizer, but the grains that are fed to livestock and what crops farmers decide to plant. Other factors contributing to the rise in fertilizer prices are the declining value of the U.S. dollar, higher transportation costs and the competition of global economies. Read the entire article here: http://www.tfi.org/publications/pricespaper.pdf