How to improve efficiency and save money with soaring fertiliser prices

Fertiliser prices have been skyrocketing for more than a year now and 2022 isn’t any better either. Add a tighter supply squeeze to the equation, and what we have now are farmers in the middle of a perfect storm for global food production.

Many contributing factors drove the surges in fertiliser prices and management decisions in the farm have never been this complex. While agriculture isn’t new to swings in prices and supplies, this time around, many farmers are taking it as a wake-up call to update farming strategies to handle uncertainties.

What’s keeping fertiliser prices up?

Sky-high retail prices of fertilisers started with a small upwards tick towards the end of 2020, spilling over into 2021 where price surges kept climbing until the end of the year. Some 2022 forecasts were a bit optimistic. But the Russian invasion of Ukraine is likely to keep pushing prices higher.

As of time of writing, we’re seeing around 300% fertiliser price increase and anticipated to go even higher as the conflict wages on.

1. Supply and demand imbalance

While supply and demand constantly change, input requirements are ever-growing due to increased food demand for large agricultural producers like China, India, and the US.

China started restricting the outflow of fertiliser to other countries around the middle of 2021 to keep domestic supplies steady. And as the world’s biggest producer of phosphate, this export ban drove global prices racing even higher as supplies were essentially limited.

2. Costly energy and natural gas

Manufacturing fertiliser relies heavily on natural gas, ammonia, phosphate, or potash. It’s an energy-intensive process that when a region-wide energy crisis hit Europe in 2021, the cost increase to produce chemical agricultural inputs rose pretty dramatically. The biggest producers of chemical fertilisers like BASF announced slowing or stopping production for a period to maintain margins. More recently, Yara also announced cutting fertiliser production in Europe further disrupting supplies and retail prices.

3. Disruptions in the supply chain

Global markets haven’t been the same since the pandemic. While there were short-term gains on commodity prices, labour shortages and costly shipping prices disturbed fertiliser production, affecting supply and costs. In the US, weather disruptions like hurricane Ida, a polar vortex, and droughts affected power supplies for many fertiliser plants.

Raw material supply was also affected when the US sanctioned Belarus, effectively upsetting the supply of potash needed to produce fertilisers.

4. Russia’s war with Ukraine

Both Russia and Ukraine play important global roles in fertiliser use and production, and in agriculture itself. Russia is the world’s leading exporter of fertiliser materials, a major source of oil and natural gas, and ships large quantities of agricultural products and inputs to many countries around the world. International sanctions on Russia have crippled the economy while this unimaginable conflict has undoubtedly affected every aspect of Ukraine’s daily life.

A knock-on effect in agriculture exacerbates existing dilemmas in fertiliser availability, high cost of energy, and reduced production. Worries over the global food supply are also on the rise.

Smarter ways to nourish farmlands

Many farmers will be left with no choice but to cut back on fertiliser use due to cost or supply restrictions. This might be the right time to rethink certain farm management decisions that affect costs, productivity, and sustainability.

Here are some ways farmers can improve nutrient use efficiency with limited chemical fertiliser use.

1. Optimising fertiliser use

Excess fertiliser use and poor application methods waste money and resources. Plants have a nutrient uptake limit, so when applied in excess or when heavily watered, nitrate just gets washed off into the water or gets emitted into the atmosphere.

Nutrient runoff isn’t just wasteful for farmers, but it’s a known environmental problem called nitrate leaching.

Estimates suggest that between 20-40% of nutrients applied to crops is lost to water runoff or as greenhouse gas emissions. So, there’s a good chance that a farm can be as efficient at 60-80% fertiliser supplies, which also means less purchase costs on fertilisers.

To maximise efficiency while preventing runoff, the key is to balance the rates of nutrient application with crop uptake.

2. Fine-tuning application rates

This one is a little tricky because it involves methods that are not in widespread use for many farms due to extra fees. But to stay on top of your nutrient management plan, soil sampling is recommended to understand the needs of your farm and know what role do fertilisers play in meeting your farm’s unique needs.

Soil sampling takes the guesswork out of nutrient application as it can provide clear recommendations to the rates of nutrients needed for a productive farm based on soil properties, moisture and pH levels, and yield and management history.

The quantity applied is one aspect, while application timing and application methods should also be examined. If not practised yet, adding fertiliser at the proper crop growth period can contribute to maximum plant uptake. Accurate fertiliser placement, usually towards the roots, can also make a difference in efficiency.

Also, inspect application equipment and make adjustments when not calibrated as required, as well as check irrigation settings to maximise water absorption and minimise nitrate leaching and runoff.

3. Adapting agro-ecological farming practices

Adding fertilisers serve to replenish depleted nutrients in the soil such as nitrogen, phosphorus, and potassium used by plants to grow. Additional inputs, whether from organic or inorganic sources, must be managed wisely to reduce the risk of over-fertilising, water and air pollution, as well as minimising costs.

Nutrient application is just one way to manage soil and crops. Other methods such as conservation tillage, using cover crops, and adopting crop rotations are other strategies in farming that can reduce reliance on inputs.

These crop production methods focus on biological processes to preserve soil health rather than using supplemental chemical inputs. And on top of introducing cost reductions from less fertiliser use, farmers can also increase their income streams under carbon farming.

Equally as important, carbon farming methods introduce other benefits such as resilience to threatening weather and soil carbon enrichment.

Making nutrients work to your needs, budget, and profit

Expensive fertiliser and other threats to agriculture such as climate change will make farming even more challenging in years and decades to come. Don’t wait for prices to adjust to your needs — savvy farmers know that nutrient management can be handled wisely even during difficult times.

Shifting to carbon farming, along with other methods, can be a turning point towards diminished fertiliser dependence while getting paid for carbon credits. Start with the right carbon program to explore how to keep your farm productive despite prohibitive fertiliser prices.

Sources

• United States Environmental Protection Agency. (2001). Managing Agricultural Fertilizer Application to Prevent Contamination of Drinking Water. Source Water Protection Practices Bulletin. Office of Water (4606). EPA 916-F-01-028. July 2001. https://extension.usu.edu/waterquality/files-ou/Agriculture-and-Water-Quality/fertilizer.pdf

• Cordell, Dana. 8 reasons why we need to rethink the management of phosphorus resources in the global food system. Global Phosphorus Research Initiative. http://phosphorusfutures.net/wp-content/uploads/2015/02/1_P_DCordell.pdf

• Paulson, N., J. Janzen, C. Zulauf, K. Swanson and G. Schnitkey. “Revisiting Ukraine, Russia, and Agricultural Commodity Markets.” farmdoc daily (12):27, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, February 28, 2022. https://farmdocdaily.illinois.edu/2022/02/revisiting-ukraine-russia-and-agricultural-commodity-markets.html