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Putting in the crop this spring could cost farmers twice as
much as it did a year ago, unless they bought fertilizer last
fall or locked in the price with their dealers.
The price of anhydrous ammonia, the most popular -- and
cheapest -- nitrogen-based fertilizer used by Northern Plains
farmers, for example, was about 24 cents per pound or about
$400 per ton in mid-March, compared with 12 cents per pound or
about $200 a year ago. Because ammonia is used to make other
forms of nitrogen fertilizer, the costs of urea and liquid
nitrogen are a few cents higher per pound.
The escalating fertilizer prices, coupled with high fuel
prices will shrink farmers' profit margins in 2001. For
example, a wheat farmer who applies 80 pounds of nitrogen to
his field this spring will reduce his per-acre return by $10
per acre.
"Ten dollars an acre is roughly profit, if people are
lucky," said Dave Franzen, Extension Service soil
specialist at North Dakota State University.
Locking in
Meanwhile, farmers who were able to lock in a lower price
last fall are looking at less drastic increases in their input
costs. For Thompson, N.D., farmer John Galegher, locking in
fertilizer prices is just as much part of the fall routine as
harvesting the crops.
Galegher and his cousin and farming partner, Paul Galegher,
annually use about 450 tons of a variety of nitrogen-based
fertilizers on their 4,000 acres of soybeans, sugar beets,
edible beans and potatoes, so locking in the price last fall
reduced their fertilizer costs by about $25 to $50 per ton or
about $5,000 to $10,000 over this spring's prices, John
Galegher estimated.
Even with the savings, though, the Galeghers still paid
more for the fertilizer they will use for this spring's crop
than they did for their 2000 crop. And even though he has
locked in the price, Galegher knows that it's not wise to pay
for the fertilizer in the fall and then forget about it over
the winter. Farmers may be making a mistake if they assume
that paying for the fertilizer in the fall will ensure its
delivery in the spring, Galegher cautioned.
"Even if they think they've got the price, the
availability may not be there." Galegher said he keeps in
contact with his dealer after he's made the purchase to
"make sure the fertilizer is there when we need it."
The tight fertilizer supplies will make it necessary for
farmers to be flexible about their inputs, Franzen said. For
example, a farmer who normally applies anhydrous ammonia, may
have to switch to another form of fertilizer if the anhydrous
isn't available.
Cutting costs
The high cost of inputs likely will tempt farmers to reduce
their fertilizer applications, said NDSU's Franzen.
"I think farmers generally will cut back."
That's OK as long as they are reducing fertilizer
applications on crops that won't suffer quality losses or in
areas of the field that don't need as much fertilizer as other
areas, Franzen said.
For example, farmers may be able to get by with reducing
nitrogen applications on crops such as soybeans, corn, barley
and sugar beets without sacrificing yields and quality.
Wheat, however, is another story. Nitrogen is needed to
raise protein levels of wheat, Franzen said, and reducing the
rate will result in a crop that likely won't fetch a premium
price at the elevator. Meanwhile, wheat yields also will
suffer from cutbacks in nitrogen fertilizer applications.
"Why grow wheat if you're just going to grow
junk?" Franzen asked. "Even with fertilizer prices
high, it still pays to put nitrogen on most crops. The most
important thing is to soil test and make sure you need
it." Soil tests, at about $1 per acre, are a good buy
considering fertilizer costs are $30 an acre, Franzen said.
Other options
Meanwhile, farmers can reduce their fertilizer costs by
taking advantage of the nitrogen that may remain in the soil
from the previous year's crops. Crops with heavy foliage such
as soybeans, field peas, lentils and sunflowers may leave some
nitrogen behind, Franzen said.
Another good source of fertilizer is manure, if it's
applied correctly. For the optimum benefit to the soil, manure
should be spread as evenly as possible and incorporated within
four hours from when it's applied to the field, Franzen
advised.
High fertilizer prices won't be the only high input costs
farmers will face this year. Diesel fuel prices, while the
same as last year, are about 30 to 35 cents per gallon higher
than they were at the start of the 1999 season.
The higher costs ate into last year's profit and likely
will do the same this year, John Galegher said. During the
2000 farming season, the Galeghers used about 20,000 gallons
of diesel fuel in their tractors and trucks during the farming
season. With diesel fuel prices of about $1 per gallon or 30
cents more per gallon than during the 1999 season, the
Galeghers paid an additional $6,000 in fuel costs in 2000 and
it looks like costs will be similar this year.
Despite the high costs of putting in the crop and low
commodity prices, John Galegher said he still is looking
forward to this farming season.
Like all farmers, Galegher is forced, by virtue of his
occupation, to be an eternal optimist.
"If I wasn't optimistic it would get better, I'd quit.
It's kind of like cheering for the Minnesota Vikings.
"You hope things will be better next year."
For the Galeghers and farmers across the Northern Plains,
next year has arrived. |