Crop prices may look good this year, but the rising cost of inputs such as fertilizer may give some farmers sticker shock.
Fertilizer prices have risen by as much as 50 per cent, with a strong surge in recent weeks.
Jim Barclay, crop retail manager for the Hensall District Co-operative said fertilizer prices tend to be driven by crop prices, energy markets and global supply and demand.
He said the current situation brings back memories of the big price spike in 2008, although not nearly as severe.
“Back then we had some stuff that was close (to) the $1,000 range (per tonne) and we don’t have anything near there yet,” he said.
Barclay does not think supply will be an issue this year because Ontario wholesalers have a reliable supply chain. He said farmers should not be spooked into cutting back on their fertilizing plans when grain prices are so strong.
“Just because prices are going higher don’t skimp out because you have to put it all in relation to commodity prices. We have (rarely) seen prices like this, so don’t let fertilizer prices skew your decisions,” said Barclay.
That is the same advice that Michael Sharpe of Sharpe Farm Supplies in Guelph is giving his customers.
“Producers are still miles ahead. If your grain price increase is getting you an extra $200 an acre, you are probably looking at about $30-40 an acre in fertilizer input increase.”
Sharpe said the recent fertilizer price increase may look steep compared to 2020 but he said last year was an “anomaly” and current prices are not far out of line with 2019.
He said the number of fertilizer customers locking in their order early is up about 25 % this year.
Deb Campbell runs Agronomy Advantage, an independent consultant business based in the Dundalk area. She agrees fertilizer is still a good investment but if price continues to soar this spring there is a limit. She said producers need to plan and crunch the numbers.
“If fertilizer pricing exceeds a certain ratio then perhaps you might pull back,” she said. “We are still in a relatively favourable pricing scenario but that margin gets thinner as fertilizer prices continue to go up.”
Campbell has also noticed a trend this year to more producers locking in their fertilizer supplies before prices started to spike.
Jeff Pettit, of Agricultural Solutions Inc (AGSOL) based in Sebringville, specializes in biological fertilizers and said prices for his company’s products have not gone up substantially. But he says there has been a squeeze on supply. He said the lockdowns caused by COVID-19 and border restrictions have cut back on production from the company’s overseas suppliers including companies in Australia and New Zealand. He said biological products offer an alternative when chemical fertilizer prices spike up.
“We are more into building up your soil so you can rely on regenerative soil practices instead of pouring on more chemical fertilizer,” Pettit said.
