Interview with Nutrien: Fall Fertilizer Outlook

Fertilizer prices and the supply chain difficulties won’t be easing up after this year’s skyrocketing costs and conflict overseas. But there is hope for strategic thinkers. Experts advise seeking solutions to navigate this new normal.

The Fertilizer Situation Escalates

Driven by production outages, it’s not news that fertilizer supply is at risk. Add to that Russia’s Feb. 24 invasion of Ukraine, resulting in economic sanctions on Russia and Belarus (because the country supported Russia’s offensive), and the problem doubled.

Russia also accounts for other key fertilizer ingredients, including 22% of global exports of ammonia, 14% of the world’s urea exports, and 14% of monoammonium phosphate.

The situation has certainly impacted supply. According to Purdue University’s Ag Economy Barometer in May, 34% of producers said they had difficulties in purchasing inputs for 2022 crops, and 11% of producers said they had received notice from a supplier that the inputs they already purchased would not be delivered.

The supply problem is not expected to end anytime soon.

In addition to short supply, prices are experiencing double-digit increases. In the U.S. alone, the American Farm Bureau Federation and U.S. Department of Agriculture say fertilizer prices are expected to rise 12% this year after increasing 17% last year.

Sharp increases in the prices of fertilizer, pesticides, and machinery parts are expected to continue into 2023, Purdue’s Ag Economy Barometer reports. In fact, three of every four producers polled expect farm input costs to rise by at least 20% this year, while more than one-third said they expect 2023 crop input prices to be at least 10% higher.

Fall Planning Strategies

Producers are attempting to pivot to address the fertilizer issues they’re facing.

Some producers are switching to crops that require fewer nutrients, others are talking about cultivating less acreage or using less fertilizer, all with the possible outcome of reduced yields. For instance, in Brazil, some farmers are attempting to use less fertilizer on their corn crops, and in Zimbabwe and Kenya, small farmers are reverting to use manure. In other parts of the world, some farmers are attempting to stockpile fertilizer for the 2023 season in anticipation of even higher prices.

But suppliers remain hopeful. While fertilizer supply constraints will continue, we “foresee that our ability to navigate these constraints will improve,” Tarsi says.

Ramping Up Productions to Meet Demands

Some suppliers like Nutrien are assessing the duration of the Ukraine conflict to determine where there’s a need to ramp up production to ensure farmers get what they need.

For instance, as prices of crop nutrients like potash skyrocket, disrupting already tight supplies, Nutrien is planning to increase its output by nearly 1 million tonnes to about 15 million tonnes this year.

“The situation emphasizes the need for long-term solutions that support a sustainable increase in global crop production,” says Ken Seitz, Nutrien’s Interim President and CEO.

Seitz continues, “We expect to generate higher earning and cash flows in 2022, which provides an opportunity to accelerate our strategic initiatives that we believe will advance sustainable agriculture practices.”

Brazilian Market Outlook

While tight fertilizer market risks were reportedly dampening Brazil’s 2022-23 crop outlook, Nutrien reports that the pipeline for opportunities in Brazil is strong in the areas of fertilizer blenders, biological product development, and retail customer experience.

The company has four fertilizer blenders in Brazil with four more beginning production by mid-2023, in addition to the recently release biological product, Saoris.

“We are delivering well on our growth strategy in Brazil,” Tarsi says, “and continue to be confident that we’ll reach out goal of $100 million by 2023.”