Media Contact
Adam Allington
The U.S. war with Iran is wreaking havoc on the global fertilizer market. Higher oil prices increase fertilizer costs by driving up production expenses for nitrogen-based fertilizers, which rely heavily on natural gas and petroleum feedstocks.
Christopher Barrett
Professor of Applied Economics and Policy
Chris Barrett, professor of public policy and economics at Cornell University, says most farmers already have, in many cases already applied, fertilizer for spring plantings.
Barrett says:
“The price rises and looming supply shortages in fertilizer will hit only a small share, maybe 10-20% and mainly in the northern growing regions. Those farmers who haven’t yet bought fertilizer may adjust their plantings in the direction of crops that use less or no nitrogen fertilizer and away from nitrogen-loving cereals like corn or wheat.
“Soybeans and other legumes and pulses convert nitrogen from the atmosphere into usable ammonia so don’t need synthetic fertilizers the same way. Corn acreage will probably be cushioned a bit by rising fuel prices and thus rising value of ethanol. That biofuels effect will further boost the demand for soy as well as other oilseeds, like canola or sunflower.
“Wheat stands to lose out since it’s fertilizer-dependent and not useful for biofuels production. Soy stands to gain. It’s unclear whether the added costs of fuel and fertilizer will outpace the higher prices crops fetch. Growing season weather and constantly-shifting trade policies will largely determine how farmers fare financially this year. I expect mainly wheat farmers to get hurt, mainly soy growers to benefit.”
