Fertilizer fears have farmers on edge

Rising food prices globally are focusing attention on all parts of the food production chain.

Lately, eyes are falling on fertilizer. It's become more expensive than ever, which is fine for anyone holding astronomically priced shares in the Potash Corporation of Saskatchewan, the world's biggest potash manufacturer. But it's not so good for farmers or consumers.

Like a lot of other things that are going up (fuel prices, for example), rising fertilizer prices increase farmers' cost of production. Right now, while crop prices are also high, farmers are better equipped to absorb costs. But they can't pay more for land, labour, fuel and fertilizer, as a result of finally starting to make some money from their crops.

And if they must, we can't be surprised when food prices rise.

The alarm bell is sounding on fertilizer prices and supply. Guelph's George Morris Centre, an agri-food think tank, issued a report last week warning of the ramifications.

One of its big concerns is that high fertilizer prices can influence farmers' choice of crops. For example, corn needs a lot of nitrogen fertilizer. And we've come to depend on corn as a staple crop, for all kinds of products. Predictions call for at least as much corn to be needed, if not more, to feed our growing population as well as the ethanol industry.

But at some point, if fertilizer costs are too high, the report authors Beth Sparling, Jim Oehmke and Larry Martin say farmers will switch from corn to other crops such as beans, which naturally have a way of fixing their own nitrogen. Then what?

And it's not just in Canada that fertilizer fears are surfacing. A popular statistic making the rounds is that one-third of the food consumed globally is as a result of fertilizer helping plants be more productive. Jacking up fertilizer prices now is poor timing, when people are increasingly concerned worldwide about food affordability.

Inevitably, the centre says consumers will see higher prices for food products that include commodities such as corn and grains, which are shouldering these higher input costs. Fertilizer isn't the only consideration in rising prices –convenience, further processing, packaging, transportation and distribution costs (reflecting fuel prices) also factor in. But it's a big one.

The only up side to all this is that it might force the entire food production sector to take a harder look at alternatives such as animal manure as a fertilizer, instead of fertilizer mass produced in factories that take all kinds of energy.

Animal manure is a fertilizer source that is generally said to be underused. It has its downsides (handling and odour, among them), and not all North American farmers have a ready or adequate supply of animal manure around. But its proponents have always argued that manure is not waste — rather, it's a great source of plant and soil nutrients, and should be managed accordingly. Rising fertilizer costs bear that out.

So what can farmers do about this? According to the centre, a few options exist.

For example, they can try pre-purchasing or forward-contract fertilizer if they think they can beat rising prices that way. They can get together with other farmers and buy in volume, and appeal to dealers based price, service and product consistency. They can also look at what crops they're putting in their rotations, and other beneficial management practices.

But they're likely not going to be able to escape price hikes, and that's frustrating. The centre says rising and volatile fertilizer prices, and growing demand for limited supplies, will be persistent.

And in farming, those kinds of predictions are starting to sound very familiar.