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Lower fertilizer prices help improve crop budgets

An ag economist says lower fertilizer prices have played a big role in improving crop budgets in recent years.

Purdue’s David Widmar says fertilizer prices have started to move up from the lows of last fall and earlier this year.  “Anhydrous ammonia, for example – out of data reported from Illinois to the USDA is up 8 percent,” he says.  “Urea is up quite a bit more at 19 percent.  However, when we step back a little bit – fertilizer prices are lower than 2016.”

He tells Brownfield lower fertilizer prices are an obvious way to lower input costs.  But, as prices move higher – Widmar says producers need to be strategic in their last few weeks ahead of planting.  “Look at a variation of prices per pound of nutrient across the products,” he says.  “Based on the USDA data – it is saying urea is at historically high price relative to anhydrous ammonia.  Keep that in mind – maybe there is opportunity to switch sources of a nutrient.”

He says producers can also lower input costs by delaying application.  “Producers in the fall – back in October – 46 percent said they were considering reducing their fertilizer application rates in light of the tough economic conditions they were going to face,” he says.  “That’s a strategy a large share of producers are thinking about.”

Widmar says that isn’t a viable long-term strategy and runs the risk of yield loss – but could be another short-term solution to managing tight budgets.

AUDIO: David Widmar, Purdue University