Published on 04/29/96

Farm Fertilizer Prices Growing, Too

Farm crops need nitrogen to grow and produce. But when nitrogen-based fertilizer prices grow along with the plants, farmers want to know why.

The answer: the law of supply-and-demand.

"Nitrogen prices are up at least 20 percent," said Glen Harris, an agronomist with the University of Georgia Extension Service. "That's compared to last year's prices. And the increase will probably continue through this year."

How much more a farmer pays for his fertilizer, he said, depends on where and when he buys it. But everyone will likely see the price go up.

The demand for nitrogen-based fertilizers depends on how many acres of certain crops farmers plant, Harris said.

Corn, cotton and pastures or hay are the major nitrogen- requiring crops Georgia farmers grow. As acreage for these crops increases, so does the nitrogen demand.

This year, Georgia farmers expect to plant 580,000 acres of corn, an increase of 45 percent over '95.

Of all the crops that need nitrogen, corn requires the most. "About 40 percent of the nitrogen farmers use goes onto corn," Harris said.

Based only on corn acreage, Georgia farmers need 43,000 tons of nitrogen.

"Some may not need the entire base rate, due to some remaining nitrogen in the soil," Harris said. Others use poultry litter to meet some nitrogen needs.

Demand always increases, too, during the spring planting season, he said.

This year, though, not only is demand unusually high, but the supply is tighter than normal.

Extension economist Forrest Stegelin said much of the nitrogen U.S. farmers use comes from the former Soviet Union.

"They've learned about market forces and a capitalistic economy over there," he said. And to make sure they have ample supplies for their own farmers, Russian officials have cut back nitrogen exports.

As Russian exports decrease, supply tightens, demand increases -- and prices go up.

"Wholesale prices haven't gone up yet," Stegelin said. "Retail prices have gone up in expectation of the future increase."

Stegelin said rising transportation costs, both abroad and in the United States, have added to the price increase. But he and Harris both said fertilizer cost hikes aren't out of line with other farm costs.

"It's really just catching up with other inputs such as farm machinery, other agricultural chemicals and wage rates," Harris said.

Farmers who have already bought fertilizer for spring-planted crops got in just under the wire. But those who waited or need to buy more may face higher prices.

The supply may be tight for a while, too, Harris said. U.S. nitrogen-producing firms have been running at or above capacity since 1990. And no new plants are being built.

Nitrogen, no matter how much it costs, remains one of the most important chemicals farmers use.

"Without an adequate nitrogen supply, crop yields drop dramatically," Harris said.

He said farmers should apply the amount of nitrogen recommended in soil test results. That amount, from 120 to 180 pounds per acre for corn, is based on field trials and long-term crop research.

Harris said research has shown nitrogen to be the nutrient corn needs most. Using too little causes the biggest losses in yields and quality.

But just because the required rate is good, he said, twice as much isn't better. Any extra nitrogen won't help the plants at all.

And rising prices are reminders, he said, that any wasted money is more than enough.