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World-wide market dynamics, along with the war in Ukraine, send prices soaring

PMG PHOTO: PAT KRUIS - Albert Sikkens, site manager at Pratum Co-op, watched fertilizer prices double in six months. The urea he's holding went from $500 a ton to $1,000 a ton.

First the drought, now skyrocketing fertilizers prices put more of a squeeze on Jefferson County farmers. Last year at this time, both Pratum Co-op and Wilbur Ellis Company sold a ton of fertilizer for about $500. Today that same ton of fertilizer costs $1,000.

The global market hits Central Oregon

A combination of factors in the global market have pushed fertilizer prices up far faster than inflation. Suppliers to Central Oregon get their fertilizer from all over the world. To grow, plants need nitrogen, which comes from natural gas. Crystallized nitrogen, urea, is the key ingredient in many synthetic fertilizers. When natural gas prices in Europe tripled, fertilizer plants there closed. It no longer made economic sense to manufacture fertilizer. Natural gas prices pinched the supply. Other factors increased the demand.

PMG PHOTO: PAT KRUIS - The key ingredient in some fertilizers, nitrogen, comes from natural gas. When natural gas prices tripled some manufacturers in Europe couldn't afford to make fertilizer anymore so they closed their plants. "In agriculture there's a saying: 'Corn is king,'" said Albert Sikkens, site manager at the Madras Pratum Co-op, "and whatever is dictated by the Midwest on corn acres has a huge effect on the U.S. and Canada market." When corn prices go up, Midwest farmers grow more corn. Corn requires more fertilizer than most crops. The Midwest demand for fertilizer increases the cost to farmers everywhere. So, when it comes to fertilizer, farmers get hit on both sides, tighter supply and higher demand.

War in Ukraine

That all happened before Russia invaded Ukraine, which made matters worse. According to the investment banking company Morgan Stanley, Russia and Ukraine together export 28% of all fertilizers made from nitrogen and phosphorous, as well as potassium. On top of all this, Sikkens hears rumors of price gouging. "But no one can pin that down. No one can put a finger on it." Jay McCabe, sales manager at Wilbur Ellis, says he knows some farmers saved money when they applied fertilizers to their fields last fall, anticipating prices would continue to rise. Because of the drought, local farmers are planting fewer fields so will not buy as much fertilizer. But they're planting less at a time when the prices for their products are higher. "Everybody's in the same boat," says McCabe. "We're not able to take advantage of the higher prices because we're limited in the number of acres we can plant." Planting fewer acres also means farmers spread their costs over fewer acres, instead of being able to balance those costs with the crop they harvest from the entire farm. McCabe and Sikkens both see indications that the rise in fertilizer prices may be slowing and could correct soon.

Fertilizer alternatives

Farmers have no alternative. If they want to maximize their yield, they must fertilize. Some use alternatives to conventional synthetic fertilizers. "Over the past seven years, we're getting a lot of our nutrients from manure sources," said Kevin Richards of Fox Hollow Ranch. Richards says they still rely on some conventional fertilizers depending on the crop, the timing, and what nutrients they need. "We're not the only ones and we're not necessarily leading the charge," said Richards. "We saw other folks trying it and we evolved in that direction." Applying the manure is costly and labor intensive, but Richards says it adds more micro-nutrients and carbons that break down and build the organic level in the soil. "It improves the long-term health of our soil," said Richards "And it's a long-term strategy to mitigate cost and be resilient to market swings."


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