Soaring costs could impact farmers and food prices • Farm Policy News


Bloomberg writer Elizabeth Elkin reported on Friday that “North America Fertilizer Price Gauge Hit All-Time High, driving up the costs of Farmers and threatening to to get worse food inflation.

“The Green Markets Fertilizer Price Index in North America increased by 7.9% at $ 996.32 per short ton, surpassing its 2008 peak to define a new benchmark for the index which started in January 2002.

“Fertilizer index hits record, threatening higher food prices”, by Elizabeth Elkin (October 8, 2021).

The Bloomberg article explained that “the fertilizer market has been hit hard this year due to extreme weather conditions, plant closures, sanctions and rising energy costs in Canada. Europe and China, pushing prices beyond the levels that traders and Farmers had not seen since the global financial crisis.

Expensive fertilizers could increase production costs for U.S. corn farmers by 16%, according to Bloomberg’s Green Markets.

Also on Friday, William Watts reported to MarketWatch Online (Dow Jones) that “fertilizer prices were already very hot this year before a The European energy crisis has fanned the flames, potentially adding to a pinch on farmers in the United States and around the world and fueling concerns food inflation.

“It’s almost like a perfect storm for different reasons that probably have a lot of advantages in the price of different macronutrients, ”Samuel Taylor, executive director of research in Cleveland at Rabobank, said in a telephone interview.

Mr. Watts noted that, “Nitrogen the prices have been correlated, with a lag, with natural gas prices, Taylor said in a telephone interview. This means that any rise in the price of natural gas in the North American market would be about to add to rising nitrogen prices.

“Nitrogen fertilizers are a crucial input for But and corn. “

Nonetheless, the article stated that “a sharp increase in fertilizer prices will be a source of pain for farmers, but producers and consumers alike should keep the situation in perspectivesaid David Widmar, agricultural economist and co-founder of Agricultural Economic Insights, a research firm.

The bottom line is that, based on price expectations, corn still appears to be a much more profitable bet for growers, said Widmar, who expects an increase in acres of corn planted in 2022 despite rising prices. nitrogen costs.

In a closer look at some of the specific impacts of the energy crisis in China, Bloomberg writers Jeff Sutherland and Tom Hancock reported last week that “in recent weeks several factories have been forced to close or reduce the output to save electricity, like soy processors which crush beans to produce flour for animal feed and oil for cooking. Price for fertilizer, one of the most important elements of agriculture, are to skyrocket, slamming farmers already flexed under the pressure of rising costs.

“The processing industry is expected to be more severely affected than commodities such as grains and meat, Rabobank analysts wrote in a report this week. In the dairy sector, power cuts could disrupt the operation of milking machines, while pork suppliers will come under pressure from a smaller supply of cold room. “

And in the news about IndiaBloomberg writer Bibhudatta Pradhan reported last week that “India will not increase subsidies on phosphorus products fertilizers and asked producers to chorus increase prices, according to people familiar with the subject, threatening corporate margins as global commodity costs rise. “

“Prices for phosphoric acid and ammonia, used to make soil nutrients, have skyrocketed in the world market due to tight supply, put pressure on Indian producers because they import the majority of their needs, ”the Bloomberg article said.

Also last week, taking a closer look at energy issues in BrazilDow Jones writer Jeffrey T. Lewis reported that “consumer prices in Brazil jumped in September as gasoline, electricity and food prices have increased rapidly. “

Mr. Lewis pointed out that “the lack of rain in parts of Brazil affected the maize crop, increase the price of animal feed and Meat, and drought has also had an impact on fruit and vegetable prices. Brazil gets more than half of its electricity from hydroelectric sources, and low rainfall for over a year left reservoir levels low and pushed power companies to use more expensive thermal power plants. “

“The rising oil prices on world markets, and the weakness of the real, have also drives up fuel prices, and truckers, Farmers and other diesel and gasoline users pass their higher costs on to consumers, ”the Dow Jones article said.


About Author

Comments are closed.