Fertilizer prices have come down in recent months, but no one knows exactly where the train is heading — at least short term. Few predicted the extent to which prices would skyrocket, then plunge in 2008. With so much volatility in the market, it will be increasingly important to farm smarter, according to Rob Mikkelsen, Western U.S. director for the International Plant Nutrition Institute in Merced, Calif.
“There are many factors that affect fertilizer prices, both globally and domestically,” he says.
One of the most ominous in the short term is the effect U.S. ammonia plant closures have had on domestic supply and demand. “We no longer produce any of our nitrogen fertilizer domestically,” Mikkelsen says. “In the past 10 years, approximately 25 ammonia plants have been closed in the U.S. Natural gas prices go up every time an ammonia plant closes. In California, we now import all of our nitrogen from foreign countries.”
That leaves California growers vulnerable to shipping and distribution costs, rail tariffs, the value of the dollar and other economic uncertainties intrinsic to relying on foreign supply. And it doesn't end with nitrogen.
“We import almost all of our potash from Canada,” he says. “Every time our dollar goes down, they raise their prices so they can have the same value for their fertilizer we import.”
“As fertilizer became expensive last season, several countries decided they should put tariffs on their exports,” he says. “That's what gridlocked the fertilizer market. Countries that had been exporting fertilizer were suddenly keeping it for their own use.”
DAP prices fooled a great deal of people in 2008. “In the summer they were over a $1,000 a ton and now they're about $500 a ton,” Mikkelsen says. “A lot of fertilizer dealers thought they better buy as much fertilizer as they could get at a $1,000 a ton in the summer because no one knew what it was going to be in the fall. So many of them loaded their bins and warehouses and bought as much DAP as possible because they thought it might go to $2,000. So now, fertilizer dealers are stuck with this expensive inventory that growers don't want to buy.”
Dependence on imports, difficulty in accessing credit and wildly fluctuating fertilizer prices make it risky to invest in fertilizer. Growers start second-guessing whether they should put fertilizers out as they normally would or wait, hoping prices will go down.
“If you're sampling and know your levels are adequate, it could be better to hold off and see how things settle out,” Mikkelsen says. “If you're running crop deficits however, you're not going to save money by trying to save a penny or two.”
More than ever it's imperative that growers know how nutrition levels are affecting plant performance. Too much applied fertilizer is a waste of money and resources, while too little can quickly curb profitability. It is critical to make sure samples are truly representative of the nutritional profile, particularly if a grower is trying to cut back.
According to Steve Orloff, UCCE farm advisor in Yreka County, there are four methods to determine nutrient levels: visual observation, soil testing, plant tissue testing and fertilizer test strips.
“The problem with using deficiency symptoms as an indicator of nutrient levels is that it's not very definitive,” Orloff says. “It can easily mimic other problems such as water stress. Also, by the time you can visually detect a deficiency, it's too late. You've already lost yield”
Growers commonly use soil testing as opposed to plant tissue testing, but Orloff says it should be the other way around. “For phosphorous and potassium, soil testing is reasonably good,” he says. “For sulfur and boron, it's very poor and for molybdenum, it's so bad it's not even done. Plant tissue testing gives you excellent results for all of these nutrients. The difference is that plant tissue testing measures the nutrient concentration in the plant itself. However, it's difficult and time consuming to get a representative sample in the field.”
To address that problem, Orloff and his team began a multi-year project to compare the accuracy among soil samples, cored-hay samples, whole top samples, and fractionated stem samples using the recommended UC technique. The results indicated that cored-baled samples provided results very similar to the fractionated stem samples.
“Most growers are already doing quality analysis for ADF and TDN, so it doesn't take long to probe the bales,” Orloff says. “If this technique is valid, it could be incorporated into routine testing practices to greatly simplify the tissue analysis process and reduce costs. Also, due to the fact that core sampling of haystacks represents a wide range of plant material (greater than grab samples of the standing crop), it may be more representative of the overall nutrient status of a field.”
Orloff reminds growers that when fertilizer is needed, to make sure it is applied at least 60 to 90 days before first cutting for the best economic return on investment. “The response is less after that,” he says.