Supply chain issues contribute to fertilizer concerns

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Matt Conacher has some important advice for farmers in Western Canada.

“Over the next few months, buy a good chunk of your fertilizer needs and, if you can, bring it to the farm to ensure your supply,” said the senior fertilizer manager at Federated Co-operatives Limited.

All macronutrients are scarce for a variety of reasons, resulting in the highest fertilizer prices in history.

Nitrogen fertilizer production is reduced worldwide due to a myriad of factors such as very high natural gas prices in Europe, a hurricane in Louisiana and power outages in China.

On top of that, the supply chain logistics is a mess.

Panamax freight rates are double what they were at the start of the year, sea containers are very scarce and a record number of ships are anchored in ports around the world waiting to be loaded with product.

“It really looks like a perfect storm right now over fertilizer and fertilizer availability,” Conacher said.

Purchases were light in September compared to previous years but have really picked up since then as retailers and farmers realize how tight supplies have become.

Manufacturers are already selling in January and February next year, he said.

Retailers won’t want to wait long until spring comes, as they realize there is a good chance that prices will drop during the summer reset period.

“At this time, retailers could have quite a bit of trouble,” he said.

Conacher encourages all farmers to do as much soil sampling as possible now so that they have a good understanding of their spring needs and to secure these supplies.

He noted that despite the highest urea prices on record, it is still a profitable crop input due to the “fantastic” grain prices.

Todd Lewis, president of the Saskatchewan Farmers Association, cringes when he hears the advice to buy now.

“It really couldn’t be a tougher time for so many producers for cash flow,” he said.

They have just reaped an extremely disappointing harvest and many are in the process of settling contracts with buyers and crop insurance claims.

“In many situations, it has never been harder to have to shell out a lot of money early on to buy fertilizer,” Lewis said.

“It’s a real conundrum, a real catch-22. Farmers are in many ways in a wait-and-see mode.”

Conacher said it’s best not to wait too long, especially when it comes to a product like phosphate where Western Canada is completely dependent on imports from the United States and foreign suppliers like Morocco. .

“If producers wait for the phosphate to see if they can buy it in the spring, there could be a serious risk that it is not there,” he said.

Phosphate prices are already approaching the peaks reached in 2009.

Conacher remembers what happened earlier this year when shipments from Morocco arrived just in time for the spring application.

It plans a similar shutdown in 2022, unless the industry gets a head start on the ordering process, which means knowing how much farmers want as soon as possible.

Suppliers like FCL try to be proactive with ordering, but storage is limited and no one wants to get caught up with high priced products.

The supply situation for nitrogen fertilizer products is not as risky because it is produced in Western Canada and therefore the industry is not as dependent on imports.

But there could still be a shortage of urea in the spring due to expected strong demand from the United States and Brazil, Conacher said.

Lewis said that with fertilizer prices so high, corn growers in the United States could reduce their acreage, which could free up some supplies.

He also noted that if prices remain at current levels, producers in Western Canada could grow more pulses or simply reduce fertilizer application rates.

Urea accounted for almost half of all nitrogen fertilizer use in Western Canada in 2020, up from 35% five years earlier. In contrast, the use of anhydrous ammonia is declining. | Source: Fertilizer Canada

He agreed with Conacher that farmers should do soil tests this fall.

“Much of the fertilizer that was put down last spring was not used by the crop,” Lewis said.

“There may already be quite a bit of residue for next year’s harvest.”

Meanwhile, he is starting to worry about shortages of other inputs like glyphosate and even something like tires. He would hate to see the seeding interrupted by flat tires on the Prairies next spring.

Contact sean.pratt@producer.com


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