US corn and wheat yields expected to be low, midst sky rocketing demand for fertilizer

Russia’s invasion of Ukraine has significantly increased the price of commercial fertilizers.

Nearly two decades ago, Abe Sandquist had to really wrack his brain on how he could sell cow dung. He had to work really hard to convince farmers on the benefits of cow dung on their crops.

Now, the global shortage of commercial fertilizers, has made many U.S. growers knock at his door as they clamor for animal manure. 

“I wish we had more to sell,” said Sandquist, founder of Natural Fertilizer Services Inc, a nutrient management firm based in the U.S. state of Iowa. “But there’s not enough to meet the demand.”

Livestock and dairy farmers, who previously had to pay to have their animals’ dung removed, are now selling the fertilizer for a good profit to grain growers. Equipment firms that make manure spreading equipment known as “honeywagons” are also benefiting from the shortfall in fertilisers.

According to industry consultant Allen Kampschnieder, U.S. farmers are hunting for manure supplies for this spring planting season, as a result, some cattle feeders that sell waste are sold out through the end of the year,

“Manure is absolutely a hot commodity,” said Kampschnieder, who works for Nebraska-based Nutrient Advisors. “We’ve got waiting lists.”

Sky-rocketing prices for industrial fertilizer are projected to reduce US corn and wheat yields for this spring, as per U.S. government data.

Global food supplies and domestic wheat inventories are at their 14-year low following the Russian-Ukraine conflict with the war disrupting grain shipments from key suppliers.

Prices for animal waste is also surging are rising on strong demand. Prices are also highly regulated by state and federal authorities, in part due to concerns on their impact on water systems.

“Manure can cause serious problems if it contaminates nearby streams, lakes and groundwater”, said Chris Jones, a research engineer and water quality expert at the University of Iowa.

According to livestock farmers, its difficult to meet all government rules for animal manure and track their utilization.

Despite such concerns, demand for animal manure is booming.

“We’re definitely seeing farmers move toward manure with the increase in fertilizer prices,” said Jim Monroe, a spokesperson for Smithfield Foods, the world’s biggest pork producer.

Industrial fertilizers, consumers a lot of energy to produce. Their prices started surging in 2021 midst rising demand and lower supply as record natural gas and coal prices triggered output cuts by fertilizer manufacturers. Extreme weather conditions as well as COVID-19 outbreaks roiled global supply chains.

The war in Russia and Western sanctions have made the situation worse especially since Russia and Belarus account for more than 40% of global exports of potash, one of three critical nutrients used to boost crop yields, according to Dutch lender Rabobank.

As of March, the price of commercial fertilizer touched a record high, with the price of nitrogen fertilizer jumping 400% since 2020; prices of phosphate and potash have also risen by 300%, said London-based consultancy CRU Group.

Categories: Creativity, Economy & Finance, Entrepreneurship, Geopolitics, HR & Organization, Regulations & Legal, Strategy, Sustainability

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